Regulations Governing Non Stock Savings and Loan Associaitons

MANUAL OF REGULATIONS FOR NON-BANK FINANCIAL INSTITUTIONS
S REGULATIONS
(Regulations Governing Non-Stock Savings and Loan Associations)
TABLE OF CONTENTS
PART ONE - ORGANIZATION, MANAGEMENT AND ADMINISTRATION
A. SCOPE OF AUTHORITY
SECTION 4101S Scope of Authority of Non-Stock Savings and Loan Associations

4101S.1 Membership
4101S.2 Organizational requirements
SECTIONS 4102S - 4105S (Reserved)
B. CAPITALIZATION
SECTION 4106S Capital of NSSLAs

4106S.1 Regulatory treatment of capital contributions
of members
4106S.2 - 4106S.6 (Reserved)
4106S.7 Revaluation surplus
C. (RESERVED)
D. CAPITAL-TO-RISK ASSETS RATIO
SECTION 4116S Capital-to-Risk Assets Ratio
SECTION 4117S Withdrawable Share Reserve
SECTION 4118S Surplus Reserve for Ledger Discrepancies
ix
SECTION 4119S Reserve for Office Premises, Furniture, Fixtures and Equipment
SECTION 4120S (Reserved)
E. (RESERVED)
F. NET INCOME DISTRIBUTION
SECTION 4126S Limitations on Distribution of Net Income

4126S.1 Reporting and verification
4126S.2 Recording of net income for distribution
G. TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS
SECTION 4141S Definition; Qualifications; Responsibilities and Duties of

Trustees
4141S.1 Definition of trustees
4141S.2 Qualifications of trustees
4141S.3 Powers/responsibilities and duties of trustees
4141S.4 General responsibility of the board of trustees
4141S.5 Duties and responsibilities
SECTION 4142S Definition and Qualifications of Officers

4142S.1 Definition of officers
4142S.2 Qualifications of officers
4142S.3 Duties and responsibilities of officers
SECTION 4143S Disqualification of Trustees and Officers

4143S.1 Persons disqualified to become trustees
4143S.2 Persons disqualified to become officers
4143S.3 Disqualification procedures
4143S.4 Effect of non-possession of qualifications or
possession of disqualifications
4143S.5 (Reserved)
4143S.6 Watchlisting
SECTION 4144S Compensation of Trustees, Officers and Employees

4144S.1 Compensation increases
4144S.2 Liability for loans contrary to law
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SECTION 4145S Bonding of Officers and Employees
SECTION 4146S Agents and Representatives
SECTION 4147S Bio-data of Trustees and Officers
SECTION 4148S Full-Time Manager for NSSLAs
H. BRANCHES AND OTHER OFFICES
SECTION 4151S Establishment of Branches/Extension Offices

4151S.1 Application
4151S.2 Conditions precluding acceptance/processing of
application
4151S.3 Internal control system
4151S.4 Permit to operate
I. BUSINESS DAYS AND HOURS
SECTION 4156S Business Days and Hours
J. REPORTS
SECTION 4161S Records

4161S.1 Uniform System of Accounts
4161S.2 Philippine Financial Reporting Standards/
Philippine Accounting Standards
SECTION 4162S Reports

4162S.1 Categories and signatories of reports
4162S.2 Manner of filing
4162S.3 Sanctions and procedures for filing and payment
of fines
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SECTION 4164S Internal Audit Function
4164S.1 Status
4164S.2 Scope
4164S.3 Qualification standards of the internal auditor
4164S.4 Code of Ethics and Internal Auditing Standards
K. INTERNAL CONTROL
SECTION 4171S External Auditor
SECTION 4172S Financial Audit

4172S.1 Audited financial statements of NSSLAs
4172S.2 Posting of audited financial statements
SECTION 4174S Risk Management Function
SECTION 4180S Selection, Appointment, Reporting Requirements and Delisting

of External Auditors and/or Auditing Firm; Sanction
L. MISCELLANEOUS PROVISIONS
SECTION 4181S Publication Requirements
SECTION 4182S Business Name
SECTION 4183S Prohibitions
SECTION 4190S Guidelines on Outsourcing
SECTIONS 4191S (Reserved)
SECTION 4192S Prompt Corrective Action Framework
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SECTION 4193S Supervision by Risks
SECTION 4194S Market Risk Management
SECTION 4195S Liquidity Risk Management
SECTION 4196S Information Technology Risk Management (ITRM)

4196S.1 Declaration of policy
4196S.2 Purpose and scope
4196S.3 Complexity of IT risk profile
4196S.4 IT rating system
4196S.5 Definition of terms
4196S.6 Description of IT-related risks
4196S.7 IT Risk Management System (ITRMS)
4196S.8 Reports
4196S.9 Sanctions and penalties
SECTION 4199S General Provision on Sanctions
PART TWO - DEPOSIT AND BORROWING OPERATIONS
A. DEMAND DEPOSITS
SECTION 4201S Checking Accounts
B. SAVINGS DEPOSITS
SECTION 4206S Definition
SECTION 4207S Minimum Deposit
SECTION 4208S Withdrawals
SECTION 4209S Dormant Savings Deposits
xiii
C. (RESERVED)
D. TIME DEPOSITS
SECTION 4222S Minimum Term and Size of Time Deposits
SECTION 4223S Withdrawals of Time Deposits
E. - F. (RESERVED)
G. INTEREST ON DEPOSITS
SECTION 4241S Interest on Savings Deposits
SECTION 4242S Interest on Time Deposits

4242S.1 Time of payment
4242S.2 Treatment of matured time deposits
H. (RESERVED)
I. SUNDRY PROVISIONS ON DEPOSIT OPERATIONS
SECTION 4261S Opening and Operation of Deposit Accounts

4261S.1 Who may open deposit accounts
4261S.2 Identification of member-depositors
4261S.3 Number of deposit accounts
4261S.4 Signature card
4261S.5 Passbook and certificate of time deposit
4261S.6 Deposits in checks and other cash items
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J. (RESERVED)
K. OTHER BORROWINGS
SECTION 4286S Borrowings
PART THREE - LOANS AND INVESTMENTS
A. LOANS IN GENERAL
SECTION 4301S Lending Policies

4301S.1 Authority; loan limits; maturity of loans
SECTION 4302S Basic Requirements in Granting Loans
SECTION 4303S Loan Proceeds
SECTION 4304S Loan Repayment
SECTION 4305S Interest and Other Charges

4305S.1 - 4305S.2 (Reserved)
4305S.3 Interest in the absence of stipulation
4305S.4 Escalation clause; when allowable
4305S.5 Interest accrual on past due loans
4305S.6 Method of computing interest
SECTION 4306S Past Due Accounts

4306S.1 Accounts considered past due
4306S.2 Extension/renewal of loans
4306S.3 Write-off of loans as bad debts
4306S.4 Updating of information provided to credit
information bureaus
xv
SECTION 4307S "Truth in Lending Act" Disclosure Requirements
4307S.2 Information to be disclosed
4307S.3 Inspection of contracts covering credit
transactions
4307S.4 Posters
4307S.5 Sanctions and penal provisions
SECTION 4308S Restructured Loans; General Policy
SECTION 4309S Renewal of Loans
SECTION 4310S Minimum Required Disclosure
SECTION 4311S Unfair Collection Practices
SECTION 4312S Confidentiality of Information
SECTION 4313S Sanctions
B. SECURED LOANS
SECTION 4321S Kinds of Security
C. - D. (RESERVED)
SECTION 4337S Salary Loans

E. LOANS/CREDIT ACCOMMODATIONS TO TRUSTEES, OFFICERS,

STOCKHOLDERS AND THEIR RELATED INTERESTS
SECTION 4356S General Policy
SECTION 4357S Direct/Indirect Borrowings; Ceilings
xvi
SECTION 4358S Records; Reports
SECTION 4370S Sanctions
F. - I. (RESERVED)
J. OTHER OPERATIONS
SECTION 4391S Fund Investments

4391S.1 - 4391S.2 (Reserved)
4391S.3 Investment in debt and marketable equity securities
4391S.4 - 4391S.10 (Reserved)
SECTION 4392S Loan Portfolio and Other Risk Assets Review System
K. MISCELLANEOUS PROVISIONS
PART FOUR - BSP REGULATIONS ON FINANCIAL CONSUMER

PROTECTION
A. CONSUMER PROTECTION OVERSIGHT FUNCTION
SECTION 4401S Consumer Protection Oversight Function

4401S.1 Role and Responsibility of the Board and Senior
Management
4401S.2 Consumer Protection Risk Management Syetem
(CPRMS)
B. CONSUMER PROTECTION STANDARDS OF CONDUCT FOR BSFIS
SECTION 4402S Consumer Protection Standards

4402S.1 Disclosure and Transparency
4402S.2 Protection of Client Information
xvii
4402S.3 Fair Treatment
4402S.4 Effective Recourse
4402S.5 Financial Education and Awareness
C. ENFORCEMENT ACTIONS
SECTION 4403S Enforcement Actions
PART FIVE - (RESERVED)
PART SIX - MISCELLANEOUS
A. OTHER OPERATIONS
SECTION 4601S Fines and Other Charges

4601S.1 Guidelines on the imposition of monetary
penalties; payment of penalties or fines
SECTION 4631S Revocation/Suspension of Non-Stock Savings and Loans

Association License
SECTION 4641S Electronic Services
SECTION 4642S Issuance and Operations of Electronic Money

4642S.1 Declaration of policy
4642S.2 Definitions
4642S.3 Prior Bangko Sentral approval
4642S.4 Common provisions
4642S.5 Quasi-bank license requirement
4642S.6 Sanctions
4642S.7 Transitory provisions
4642S.8 - 4642S.10 (Reserved)
4642S.11 Outsourcing of services by Electronic Money
Issuers (EMIs) to Electronic Money Network
Service Providers (EMNSP)
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SECTION 4650S Philippine and Foreign Currency Notes and Coins
B. SUNDRY PROVISIONS
SECTION 4651S Notice of Dissolution
SECTION 4652S Confidential Information
SECTION 4653S Examination by the Bangko Sentral
SECTION 4654S Applicability of Other Rules
SECTION 4655S Annual Supervisory Fees
SECTION 4656S Basic Law Governing Non-Stock Savings and Loan

Associations
SECTION 4657S Non-Stock Savings and Loan Associations Premises and

Other Fixed Assets
4657S.1 Accounting for non-stock savings and loans
associations premises; other fixed assets
4657S.2 (Reserved)
4657S.3 Reclassification of real and other properties
acquired as non-stock savings and loans
association premises
4657S.4 - 4657S.8 (Reserved)
4657S.9 Batas Pambansa Blg. 344 - An Act to Enhance
the Mobility of Disabled Persons by Requiring
Certain Buildings, Institutions, Establishments
and Public Utilities to Install Facilities and Other
Devices
4657S.10 Republic Act No. 9994 - An Act Granting
Additional Benefits and Privileges to Senior
Citizens, Further Amending Republic Act No.
7432 of 1992 As Amended by Republic Act
No. 9257 of 2003.
xix
SECTION 4660S Disclosure of Remittance Charges and Other Relevant
Information
SECTION 4691S Anti-Money Laundering Regulations

4691S.1 - 4691S.8 (Reserved)
4691S.9 Sanctions and penalties
SECTION 4695S Valid Identification Cards for Financial Transactions
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List of Appendices
14.12.31
LIST OF APPENDICES
No. SUBJECT MATTER
S-1 Safeguards in Bonding of NSSLA Accountable Officers and Employees
S-2 List of Reports Required from Non-Stock Savings and Loan Associations
Annex S-2-a - Reporting Guidelines on Crimes/Losses
S-3 Guidelines on Prescribed Reports Signatories and Signatory Authorization

Annex S-3-a - Format of Resolution for Signatories of Category A-1
Reports
Annex S-3-b - Format of Resolution for Signatories of Category A-2
Reports
Annex S-3-c - Format of Resolution for Signatories of Categories A-3
and B Reports
S-4 Format of Disclosure Statement on Small Business/Retail/Consumer

Credit
S-5 Abstract of "Truth in Lending Act" (Republic Act No. 3765)
S-6 Anti-Money Laundering Regulations (Deleted pursuant to Circular No.

706 dated 05 January 2011)
Annex S-6-a - Certification of Compliance with Anti-Money
Laundering Regulations (Deleted pursuant to Circular
No. 706 dated 05 January 2011)
Annex S-6-b - Rules on Submission of Covered Transaction Reports
and Suspicious Transaction Reports by Covered
Institutions (Deleted pursuant to Circular No. 706
dated 05 January 2011)
S-7 Revised Implementing Rules and Regulations R.A. No. 9160, as

amended by R.A. No. 9194 (Deleted pursuant to Circular No. 706 dated
05 January 2011)
S-8 Guidelines to Govern the Selection, Appointment, Reporting

Requirements and Delisting of External Auditors and/or Auditing Firm
of Covered Entities
xix
List of Appendices
14.12.31
LIST OF APPENDICES
No. SUBJECT MATTER
S-9 Guidelines in Classifying Loans and Other Risk Assets and Setting up
Allowance for Probable Losses
S - 10 Guidelines and Procedures Governing the Consumer Assistance

Management System (CAMS) of BSP-Supervised Financial Institutions
xx
§§ 4101S - 4101S.2
08.12.31
PART ONE
ORGANIZATION, MANAGEMENT AND ADMINISTRATION
A. SCOPE OF AUTHORITY foregoing definition, shall be allowed to

continue as such.
Section 4101S Scope of Authority of The Monetary Board may, as
Non-Stock Savings and Loan Associations circumstances warrant, require NSSLAs
(NSSLA). An NSSLA shall include any non- mentioned in the immediately preceding
stock, non-profit corporation engaged in the paragraph to amend their by-laws to comply
business of accumulating the savings of its with the concept of a well-defined group.
members and using such accumulations for c. In no case shall the total amount of
loans to members to service the needs of entrance fees exceed one percent (1%) of
households by providing long-term financing the amount to be contributed or otherwise
for home building and development and for paid-in by the particular member: Provided,
personal finance. An NSSLA may also That for new members, the fee shall be based
engage in a death benefit program meant on the amount of contributions computed
exclusively for the benefit of its members. in accordance with the revaluation of the
An NSSLA shall accept deposits from assets of the NSSLA.
and grant loans to its members only and shall
not transact business with the general public.
§ 4101S.2 Organizational
requirements1
§ 4101S.1 Membership
a. Articles of Incorporation; by-laws
a. NSSLAs shall issue a certificate of
The articles of incorporation and by-laws
membership to every qualified member and
of a proposed NSSLA, or any amendment
shall maintain a registry of their members.
thereto, shall not be registered with the SEC
b. An NSSLA shall confine its
unless accompanied by a certificate of
membership to a well-defined group of
persons. approval from the Monetary Board.
A well-defined group shall consist of any b. Application for approval. The articles
of the following: of incorporation and by-laws of a proposed
(1) Employees, officers, and trustees of NSSLA, both accomplished in the
one (1) company, including member- prescribed forms, shall be submitted to the
retirees; Monetary Board through the appropriate
(2) Government employees belonging to department of the SES together with a
the same office, branch, or department, covering application for the approval
including member-retirees; and thereof, signed by a majority of the board of
(3) Immediate members of the families trustees and verified by one of them. The
up to the second degree of consanguinity or application shall include:
affinity of those falling under Items “(1)” and (1) The proposed articles of
“(2)” above. incorporation and by-laws together with the
NSSLAs whose articles of incorporation names and addresses of the incorporators,
and by-laws were approved and registered trustees and officers, with a statement of
prior to the effectivity of R. A. No. 8367 and their character, experience,and general
which limit and/or allow membership fitness to engage in the non-stock savings
coverage broader or narrower than the and loan business;
1
See SEC Circular No. 3 dated 16 February 2006.
Manual of Regulations for Non-Bank Financial Institutions S Regulations

Part I - Page 1
§§ 4101S.2 - 4106S.1
13.12.31
(2) An itemized statement of the NSSLAs shall adopt policies to

estimated receipts and expenditures of the encourage their members to increase their
proposed NSSLA for the first year; capital contributions which shall be
(3) Filing fee of P1,000; and classified by the NSSLA as either fixed/non-
(4) Such other information as the withdrawable or withdrawable capital in
Monetary Board may require. accordance with the definition provided
c. Grounds for disapproval of under Subsec. 4106S.1. Partial withdrawal
application. The Monetary Board may deny from the amount paid by a member as
the application to organize an NSSLA on the withdrawable capital contributions, during
basis of a finding that: his membership, may be allowed unless the
(1) The NSSLA is being organized for by-laws of the NSSLA provide otherwise:
any purpose other than to engage in the Provided, That policies allowing the partial
business of a legitimate NSSLA; withdrawal by a member of his
(2) The NSSLA’s financial program is withdrawable capital contributions shall
unsound; comply with the provisions of Subsec.
(3) The proposed members are 4106S.1.
adequately served by one (1) or more (As amended by Circular Nos.789 dated 28 February 2013 and
existing NSSLAs; and 573 dated 22 June 2007)
(4) There exist other reasons which the
§ 4106S.1 Regulatory treatment of
Monetary Board may consider as sufficient
capital contributions of members. An
ground for such disapproval.
NSSLA shall ensure that monies received
d. Certificate of authority to operate;
representing capital contributions are duly
revocation or suspension thereof. NSSLAs,
registered in the books of the Association
prior to transacting business, shall procure
under the name of the member making such
a certificate of authority to transact business
contributions.
from the Monetary Board. After due notice
Capital contributions of members shall
and hearing, the Monetary Board may
be classified by an NSSLA as either fixed/
revoke or suspend, for such period as it
non-withdrawable or withdrawable as
determines, the certificate of authority of any
herein defined.
NSSLA, the solvency of which is imperiled
a. Fixed/non-withdrawable capital refers
by losses or irregularities, or of any NSSLA
to the member’s capital contribution in the
which willfully violates any provision of
NSSLA which he must maintain for the
R. A. No. 8367, these rules or any pertinent
duration of his membership thereon.
law or regulation.
(As amended by CL-2008-078 dated 15 December 2008) (1) Minimum Amount - Every member
of an NSSLA shall be required to maintain
Secs. 4102S - 4105S (Reserved) a fixed/non-withdrawable capital
contribution of at least P1,000.00 unless a
B. CAPITALIZATION higher minimum is prescribed under the
NSSLA’s by-laws.
Sec. 4106S Capital of NSSLAs. A newly (2) Ceiling. An NSSLA shall encourage
organized NSSLA shall have a minimum all its members to increase their fixed/non-
initial aggregate capital contribution of P1.0 withdrawable capital over time beyond
million. Thereafter, an NSSLA shall maintain the minimum amount prescribed under Item
a minimum capital that would allow it to “(1)” hereof.
comply with the capital adequacy ratio However, to ensure that control over
requirement as provided under Sec. 4116S. the affairs of the NSSLA remains
S Regulations Manual of Regulations for Non-Bank Financial Institutions

Part I - Page 2
§§ 4106S.1 - 4116S
13.12.31
broad-based, the total amount that a pertinent provisions of its by-laws and
member and/or his immediate family may written policies to comply with the
contribute as fixed/ non-withdrawable foregoing requirements: Provided, That
contributions shall be subject to a ceiling amounts held in excess of the prescribed
which shall be determined by the board ceiling under Item “b.(1)” hereof as of
of trustees and duly confirmed by the 22 March 2013 shall be allowed to
NSSLA’s general assembly. The prescribed continue as such but once reduced shall not
ceiling shall be applied uniformly to all thereafter be increased beyond the
members: Provided, That in cases where prescribed ceiling.
the NSSLA is unable to comply with the (As amended by Circular No. 789 dated 28 February 2013)
capital adequacy ratio requirement as
provided under Sec. 4116S, any deviation §§ 4106S.2 - 4106S.6 (Reserved)
from the uniform application of or setting-
up of aforesaid ceiling may be allowed. § 4106S.7 Revaluation surplus. In cases
b. Withdrawable capital refers to the of both retiring and new members, a
amount of capital contributions which may revaluation surplus shall be added to their
be withdrawn by a member pursuant to the contributions by imputing their respective
terms and conditions prescribed under the proportionate shares in the withdrawable
NSSLA’s by-laws, or as approved by the share reserve and the reserve for furniture,
board of trustees and duly confirmed by fixtures, and furnishings.
(As amended by Circular No. 789 dated 28 February 2013)
the NSSLA’s general assembly.
(1) Ceiling. At no time shall the total
Secs. 4107S - 4110S (Reserved)
withdrawable capital contributions of a
member and that of his immediate family,
C. (RESERVED)
as defined in Subsec. 4101S.1.b(3), exceed
ten times (10X) their fixed/non-withdrawable
capital contributions.
(2) Restrictions on withdrawability.
D. CAPITAL-TO-RISK ASSETS RATIO
Notwithstanding the capital contributions’
withdrawability, the NSSLA shall establish Sec. 4116S Capital-to-Risk Assets Ratio
and prescribe the conditions and/or Capital-to-risk assets ratio (CAR) is an
circumstances when the NSSLA may limit important tool to measure solvency and
the withdrawal of the members’ effectively manage the risk-taking activities
withdrawable capital contributions, such as, of an NSSLA, determine its capacity to
when the NSSLA is under liquidity stress absorb unexpected losses, and adequately
or is unable to meet the capital adequacy provide protection to members and
ratio requirement under Sec. 4116S. creditors.
c. Limit on total capital contributions. The CAR, expressed as a percentage of
NSSLAs shall prescribe a maximum amount total capital accounts to total risk assets shall
on the total amount of fixed and not be less than ten percent (10%).
withdrawable capital contributions that a For purposes of computing CAR, the
family group [i.e., member and his aggregate amount of withdrawable capital
immediate family as defined under Subsec. contributions that shall be allowed to form
4101S.1.b(3)] may hold in an NSSLA. part of an NSSLA’s total capital accounts
Transitory provisions. An NSSLA shall shall be capped at ten times (10X) the
have one (1) year period reckoned from aggregate amount of fixed/non-withdrawable
22 March 2013 within which to amend the capital contributions.

Part I - Page 3
§§ 4116S - 4118S
13.12.31
The total risk asset is defined as total Transitory provisions. An NSSLA which
assets minus the following assets: failed to meet the minimum CAR as
a. Cash on hand; prescribed above shall have until 30 June
b. Evidences of indebtedness of the 2013 within which to comply.
Republic of the Philippines and any other (As amended by Circular Nos. 789 dated 28 February 2013 and
573 dated 22 June 2007)
evidences of indebtedness/obligations, the
servicing and repayment of which are fully Sec. 4117S Withdrawable Share Reserve
guaranteed by the Republic of the NSSLAs shall create a withdrawable share
Philippines; reserve which shall consist of two percent
c. Loans to the extent covered by hold- (2%) of the total capital contributions of the
out on, or assignment of, deposits members.
maintained in the lending NSSLA; An amount corresponding to the
d. Office premises, depreciated; withdrawable share reserve shall be set up
e. Furniture, fixtures and equipment, by the NSSLA, such amount invested in
depreciated; bonds or evidences of indebtedness of the
f. Real estate mortgage loans guaranteed Republic of the Philippines or of its
by the Home Guarantee Corporation to the subdivisions, agencies or instrumentalities,
extent covered by the guarantee; and the servicing and repayment of which are
g. Other non-risk items as the Monetary fully guaranteed by the Republic of the
Board may, from time to time, authorize to Philippines, and evidences of indebtedness
be deducted from total assets. of the Bangko Sentral.
The Monetary Board shall prescribe the For a uniform interpretation of the
manner of determining the total assets of provisions of this Section, the following shall
such NSSLA for the purpose of this Section, serve as guidelines:
but contingent accounts shall not be a. The withdrawable share reserve shall
included among total assets. be set up from the undivided profits of the
Whenever the capital accounts of an NSSLA and shall be funded in the form of
NSSLA are deficient with respect to the cash deposited as a separate account and/
preceding paragraph, the Monetary Board, or an investment allowed under this Section;
after considering the report of the b. Should there be an increase in the
appropriate department of the SES on the capital contribution, the reserve shall be
state of solvency of the NSSLA concerned, correspondingly adjusted at the end of each
shall limit or prohibit the distribution of net month from undivided profits, if any; and
income and shall require that part or all of c. The reserve shall be adjusted first
net income be used to increase the capital before the NSSLA shall declare and
accounts of the NSSLA until the minimum distribute to its members any portion of its
requirement has been met. The Monetary net income at any time of the year.
Board may, after considering the aforesaid (As amended by Circular No. 573 dated 22 June 2007)
report of the appropriate department of the
SES, and if the amount of the deficiency Sec. 4118S Surplus Reserve for Ledger
justifies it, restrict or prohibit the making of Discrepancies. Whenever an NSSLA has a
new investments of any sort by the NSSLA discrepancy between its general ledger
with the exception of the purchases of accounts and their respective subsidiary
evidence of indebtedness included under ledgers, the board of trustees of the NSSLA
Item “b” of this Section until the minimum shall set up from the undivided profits of
required capital ratio has been restored. the NSSLA, if any, a surplus reserve, in an

Part I - Page 4
§§ 4118S - 4126S
13.12.31
amount equivalent to the amount of the income to members out of its adjusted
discrepancy, and this reserve shall not be Undivided Profits and the balance of its
available for distribution to members or for Surplus Free account as of the calendar year-
any other purpose unless and until the end or fiscal year-end immediately preceding
discrepancy is accounted for. The board of the date of net income distribution:
trustees shall also direct the employee Provided, That in addition to the
responsible for the discrepancy to account requirements as provided in this Section, in
for said discrepancy: Provided, That the no case shall the NSSLA distribute any of
failure of the employee to do so shall its net income and/or surplus to its members
constitute as ground for his dismissal if the if its CAR and capital contributions are
discrepancy is of serious or recurring nature. below the level required under Secs. 4106S
(As amended by Circular Nos. 661 dated 01 September 2009 and 4116S , respectively.
and 573 dated 22 June 2007)
b. Basis for participation in profits
Sec. 4119S Reserve for Office Premises, Member-contributors of an NSSLA may
Furniture, Fixtures and Equipment. NSSLAs participate in the profits of the NSSLA on
shall set aside five percent (5%) of their the basis of the balances of their capital
yearly net income until it amount to at least contributions as determined by the board
five percent (5%) of the total assets as a of trustees: Provided, That an NSSLA shall
reserve for a building fund to cover the cost distribute net income to members only once
of construction or acquisition of office in a calendar or fiscal year adopted by such
premises, and of the purchase of office NSSLA.
furniture, fixtures and equipment.
c. Level of withdrawable share reserve
An NSSLA which, as determined by its
No NSSLA shall distribute any of its net
board of trustees, has adequate office
income to its members if the withdrawable
premises, furniture, fixtures and equipment
share reserve required under Sec. 4117S is
necessary for the conduct of its business
less than, or by such distribution would be
need not set up the reserve: Provided, That
reduced below, the amount specified in said
this fact should be certified by its board of
Section. The reserve shall be adjusted first
trustees in a resolution to be submitted to
before the NSSLA shall distribute its net
the appropriate department of the SES for
income for the year.
verification and approval: Provided,
d. Discrepancies between the general
however, That in case reserves had been
ledger and subsidiary ledger accounts. The
set up, the NSSLA so exempted may revert
surplus reserves set up as required under
the reserves to free surplus.
Sec. 4118S shall not be reverted to Surplus
(As amended by Circular No. 573 dated 22 June 2007)
Free available for distribution to members
Sec. 4120S (Reserved) unless and until the discrepancy between
the general ledger accounts and their
E. (RESERVED) respective subsidiary ledgers for which the
surplus reserve has been set up ceases to
Secs. 4121S - 4125S (Reserved) exist.
e. Other unbooked capital adjustments
F. NET INCOME DISTRIBUTION required by Bangko Sentral, whether or not
allowed to be set up on a staggered basis
Sec. 4126S Limitations on Distribution of The unbooked loss reserves and other
Net Income unbooked capital adjustments required by
a. Amount available for income the Bangko Sentral based on the latest
distribution. An NSSLA may distribute net approved Report of Examination of the

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§§ 4126S - 4141S.2
13.12.31
NSSLA, whether or not allowed to be set the SES whichever comes earlier. A
up on a staggered basis, shall be deducted memorandum entry may be made to trustees
from the amount of net income available for and for full disclosure purposes, the amount
of income for distribution may be disclosed
distribution to members.
in the financial statements by means of a
f. Interest and other income earned but
footnote which should include a statement
not yet collected/received, net of allowance to the effect that the distribution is subject
for credit losses. Accrued interest and other to review by the Bangko Sentral.
income not yet received but already (As amended by Circular No. 573 dated 22 June 2007)
recorded by an NSSLA from financial assets,
net of allowance for credit losses, shall be Secs. 4127S - 4140S (Reserved)
deducted from the amount of net income
available for distribution to members. G. TRUSTEES, OFFICERS, EMPLOYEES
(As amended by Circular Nos. 789 dated 28 February 2013 and AND AGENTS
573 dated 22 June 2007)
Strengthening Corporate Governance. It
§ 4126S.1 Reporting and verification is the thrust of the Bangko Sentral to
Declaration of income for distribution to continuously strengthen corporate governance
members shall be reported by an NSSLA in its supervised financial institutions
concerned to the appropriate department of cognizant that this is central in sustaining
the SES in the prescribed form (Revised BSP the resiliency and stability of the financial
Form No. 7-26-25H) within ten (10) business system. In this light, the Bangko Sentral is
days after date of declaration. aligning its existing regulations with
Pending verification of abovementioned international best practices that promote
report by the appropriate department of the good corporate governance such as the
SES, the NSSLA concerned shall not make “Principles for Enhancing Corporate
any announcement or communication on Governance” issued by the Basel Committee
the intended distribution of net income or on Banking Supervision.
shall any actual distribution be made (Circular No. 749 dated 27 February 2012)
thereon.
In any case, the declaration may be
Sec. 4141S Definition; Qualifications;
announced and the income distributed, if
Responsibilities and Duties of Trustees
after twenty (20) business days from the date
For purposes of this Section, the following
of the report required herein shall have been
shall be the definition, qualifications,
received by the Bangko Sentral, no advice
responsibilities and duties of trustees.
against such distribution has been received
by the NSSLA concerned.
(As amended by Circular Nos. 661 dated 01 September 2009
§ 4141S.1 Definition of trustees
and 573 dated 22 June 2007) Trustees shall include: (a) those who are
named as such in the articles of
§ 4126S.2 Recording of net income for incorporation; (b) those duly elected in
distribution. The liability for members’ share subsequent meetings of the NSSLA’s
in the net income distribution shall be taken members; and (c) those elected to fill
up in the books upon receipt of Bangko vacancies in the board of trustees.
Sentral approval thereof, or if no such
approval is received, after twenty (20) § 4141S.2 Qualifications of trustees
business days from the date the required No person shall be eligible as trustee of an
Report on Distributable Net Income was NSSLA unless he is a member of good
received by the appropriate department of standing of such NSSLA.

Part I - Page 6
§§ 4141S.2 - 4141S.5
13.12.31
In addition, such person shall have the § 4141S.3 Powers/responsibilities and

qualifications and none of the duties of trustees. The corporate powers of
disqualifications as provided in pertinent an NSSLA shall be exercised, its business
laws and Bangko Sentral rules. A trustee conducted and all its property controlled
shall have the following minimum and held by its board of trustees. The powers
qualifications: of the board of trustees as conferred by law
(1) He shall be at least twenty five (25) are original and cannot be revoked by the
years of age at the time of his election or members. The trustees hold their office
appointment; charged with the duty to exercise sound and
(2) He shall be at least a college graduate objective judgment for the best interest of
or have at least five (5) years experience in the NSSLA.
business, or shall have undergone any (As amended by Circular Nos.757 dated 08 May 2012 and 749
Bangko Sentral training in NSSLA or banking dated 27 February 2012)
operations: Provided, however, That an
undergraduate eligible to be elected as § 4141S.4 General responsibility of the
trustee in the NSSLA’s by-laws may be board of trustees. The position of an NSSLA
allowed as may be approved by the Bangko trustee is a position of trust. A trustee
Sentral: Provided, further, That Bangko assumes certain responsibilities to different
constituencies or stakeholders, i.e., the
Sentral approval shall no longer be required
NSSLA itself, member-depositors, its clients
for a re-elected college undergraduate who
and other creditors, its management and
was previously allowed to sit as trustee: employees, the regulators, deposit insurer
Provided, finally, That (1) the previous and the public at large. These constituencies
approval was obtained on or after or stakeholders have the right to expect that
01 January 2011; and (2) the trustee has had the institution is being run in a prudent and
continuous service within the said NSSLA; sound manner. The board of trustees is
(3) He must have attended a special primarily responsible for approving and
seminar on corporate governance for board overseeing the implementation of the
of trustees conducted or accredited by the NSSLA’s strategic objectives, risk strategy,
Bangko Sentral; and corporate governance and corporate values.
(4) He must be fit and proper for the Further, the board of trustees is also
position of a trustee of the NSSLA. In responsible for monitoring and overseein the
determining whether a person is fit and performance of senior management as the
proper for the position of a trustee, the latter manages the day- to- day affairs of the
following matters must be considered: institution.
(As amended by Circular Nos. 757 dated 08 May 2012 and 749
integrity/probity, physical/mental fitness,
dated 27 February 2012)
competence, relevant education/financial
literacy/training, diligence and knowledge/
§ 4141S.5 Duties and responsibilities
experience.
The members of the board of trustees a. Board of trustees
shall possess the foregoing qualifications for (1) To approve and monitor the
trustees in addition to those required or implementation of strategic objectives
prescribed under R.A. No. 8791 and other Consistent with the institution’s strategic
existing applicable laws and regulations. objectives, business plans shall be
(As amended by Circular No. 800 dated 21 June 2013) established for the NSSLA including its trust

Part I - Page 7
§ 4141S.5
12.12.31
operations, and initiatives thereto shall be its trust operations. The risk management
implemented with clearly defined policy shall include:
responsibilities and accountabilities. These (a) a comprehensive risk management
shall take into account the NSSLA’s long- approach;
term financial interests, its level of risk (b) a detailed structure of limits,
tolerance and its ability to manage risks guidelines and other parameters used to
effectively. The board shall establish a govern risk-taking;
system for measuring performance against (c) a clear delineation of lines of
plans through regular monitoring and responsibilities for managing risk;
reviews, with corrective action taken as (d) an adequate system for measuring
needed. risk; and
(e) effective internal controls and a
The board shall likewise ensure that the
comprehensive risk-reporting process. The
NSSLA has beneficial influence on the
board of trustees shall ensure that a robust
economy by continuously providing services
internal reporting system is in place that shall
and facilities which will be supportive of enable each employee to contribute to the
the national economy. appreciation of the NSSLA’s overall risk
(2) To approve and oversee the exposures.
implementation of policies governing major The board of trustees shall ensure that
areas of NSSLA operations. The board shall the risk management function is given
approve policies on all major business adequate resources to enable it to effectively
activities, e.g., investments, loans, asset and perform its functions. The risk management
liability management, trust, business function shall be afforded with adequate
planning and budgeting. The board shall personnel, access to information technology
accordingly define the NSSLA’s level of risk systems and systems development
resources, and support and access to
tolerance in respect of said activities. A
internal information.
mechanism to ensure compliance with said
(4) To oversee selection and
policies shall also be provided.
performance of senior management. It is the
The board shall set out matters and
primary responsibility of the board of
authorities reserved to it for decision, which
trustees to appoint competent management
include, among others, major capital
team at all times, monitor and assess the
expenditures, equity investments and
performance of the management team based
divestments. The board shall also establish
on established performance standards that
the limits of the discretionary powers of each
are consistent with the NSSLA’s strategic
officer, committee, sub-committee and such objectives, and conduct regular review of
other groups for purposes of lending, NSSLA’s policies with the management
investing or any other financial undertaking team.
that exposes the NSSLA to significant risks. (a) The board of trustees shall apply fit
(3) To approve and oversee the and proper standards on key personnel.
implementation of risk management Integrity, technical expertise and experience
policies. The board of trustees shall be in the institution’s business, either current
responsible for defining the NSSLA’s level or planned, shall be the key considerations
of risk tolerance and for the approval and in the selection process. And because
oversight of the implementation of policies mutual trust and a close working
and procedures relating to the management relationship are important, the members of
of risks throughout the institution, including senior management shall uphold the general

Part I - Page 8
§ 4141S.5
12.12.31
operating philosophy, vision and core values of good governance from the top and in
of the institution. The board of trustees shall setting corporate values, codes of conduct
replace members of senior management, and other standards of appropriate behavior
when necessary, and have in place an for itself, the senior management and other
appropriate plan of succession. employees. The board of trustees shall:
(b) The board of trustees shall regularly (a) Articulate clear policies on the
monitor the actions of senior management handling of any transaction with directors,
and ensure that these are consistent with officers, stockholders, and their related
the policies that it has approved. It shall put interests (DOSRI) and other related parties
in place formal performance standards to ensuring that there is effective compliance
be able to effectively assess the performance with existing laws, rules and regulations at
of senior management. The performance all times and no stakeholder is unduly
standards shall be consistent with the disadvantaged. In this regard, the board of
NSSLA’s strategic objectives and business trustees shall define “related party
plans, taking into account the NSSLA’s long- transaction”, which is expected to cover a
term financial interests. wider definition than DOSRI under existing
(c) The board of trustees shall regularly regulations and a broader spectrum of
meet with senior management to engage in transactions (i.e., not limited to credit
discussions, question and critically review exposures), such that relevant transactions
the reports and information provided by the that could pose material risk or potential
latter. The board of trustees shall set the abuse to the NSSLA and its stakeholders are
frequency of meeting with senior captured.
management taking into account the size, (b) Require the NSSLA’s members to
complexity of operations and risk profile of confirm by majority vote, in the annual
the NSSLA. members’ meeting, the NSSLA’s significant
(d) The board of trustees shall regularly transactions with its DOSRI and other
review policies, internal controls and self related parties.
assessment functions (e.g., internal audit, (c) Articulate acceptable and
risk management and compliance) with unacceptable activities, transactions and
senior management to determine areas for behaviors that could result or potentially
improvement as well as to promptly identify result in conflict of interest, personal gain
and address significant risks and issues. The at the expense of the institution, or unethical
board of trustees shall set the frequency of conduct.
review taking into account the size, (d) Articulate policies that will prevent
complexity of operations and risk profile of the use of the facilities of the NSSLA in
the NSSLA. furtherance of criminal and other improper
The board of trustees shall ensure that or illegal activities, such as but not limited
senior management’s expertise and to financial misreporting, money
knowledge shall remain relevant given the laundering, fraud, bribery or corruption.
NSSLA’s strategic objectives, complexity of (e) Explicitly discourage the taking of
operations and risk profile. excessive risks as defined by internal policies
(5) To consistently conduct the affairs and establish an employees’ compensation
of the institution with a high degree of scheme effectively aligned with prudent risk
integrity. Since reputation is a very valuable taking. The compensation scheme shall be
asset, it is in the institution’s best interest adjusted for all types of risk and sensitive to
that in dealings with the public, it observes the time horizon of risk. Further, the grant
a high standard of integrity. The board of of compensation in forms other than cash
trustees shall lead in establishing the tone shall be consistent with the overall risk

Part I - Page 9
§ 4141S.5
12.12.31
alignment of the NSSLA. The board of (a) The board of trustees shall ensure
trustees shall regularly monitor and review that the NSSLA’s organizational structure
the compensation scheme to ensure that it facilitates effective decision-making and
operates and achieves the objectives as good governance. This includes clear
intended. definition and delineation of the lines of
(f) Ensure that employee pension funds responsibility and accountability, especially
are fully funded or the corresponding liability between the roles of the Chairman of the
appropriately recognized in the books of the board of trustees and Chief Executive
NSSLA at all times. Further, the board of Officer/President.
trustees shall ensure that all transactions (b) The board of trustees shall maintain,
involving the pension fund are conducted and periodically update, organizational
at arm’s length terms. rules, by-laws, or other similar documents
(g) Allow employees to communicate, setting out its organization, rights,
with protection from reprisal, legitimate responsibilities and key activities.
concerns about illegal, unethical or (c) The board of trustees shall restructure
questionable practices directly to the board itself in a way, including in terms of size,
of trustees or to any independent unit. frequency of meetings and the use of
Policies shall likewise be set on how such committees, so as to promote efficiency,
concerns shall be investigated and critical discussion of issues and thorough
addressed, for example, by an internal review of matters. It shall meet regularly to
control function, an objective external party, properly discharge its functions. It shall also
senior management and/or the board itself. ensure that independent views in board
(h) Articulate policies in communicating meetings shall be given full consideration
corporate values, codes of conduct and other and all such meetings shall be duly minuted.
standards in the NSSLA as well as the means (d) The board shall conduct and
to confidentially report concerns or maintain the affairs of the institution within
violations to an appropriate body. the scope of its authority as prescribed in
its charter and in existing laws, rules and
(6) To define appropriate governance
regulations. It shall ensure effective
policies and practices for the NSSLA and
compliance with the latter, which include
for its own work and to establish means to
prudential reporting obligations. Serious
ensure that such are followed and
weaknesses in adhering to these duties and
periodically reviewed 1 for ongoing
responsibilities may be considered as unsafe
improvement. The board of trustees,
and unsound NSSLA practice. The board
through policies and its own practices, shall
shall appoint a compliance officer who shall
establish and actively promote,
be responsible for coordinating, monitoring
communicate and recognize sound
and facilitating compliance with existing
governance principles and practices to
laws, rules and regulations. The compliance
reflect a culture of strong governance in the
officer shall be vested with appropriate
NSSLA as seen by both internal and external authority and provided with appropriate
stakeholders. support and resources.
1
NSSLAs shall submit the following to the appropriate department of the SES within 90 calendar days from
17 March 2012:
(1) A Secretary’s Certificate attesting the approval of the board of trustees to changes in the policies.
(2) Acknowledgement receipt of copies of specific duties and responsibilities of the board of trustees and
of a trustee, and certification that they fully understand the same.

Part I - Page 10
§ 4141S.5
12.12.31
(e) The board of trustees shall establish review and update periodically, or the
a system of checks and balances which respective charters of each committee or
applies in the first instance to the board other documents that set out its mandate,
itself. Among the members of the board, an scope and working procedures.
effective system of checks and balances (b) The board of trustees shall appoint
must exist. The system shall also provide a members of the committees taking into
mechanism for effective check and control account the optimal mix of skills and
by the board over the chief executive officer experience to allow the members to fully
and key managers and by the latter over the understand, be critical and objectively
line officers of the NSSLA. Checks and evaluate the issues. In order to promote
balances in the board shall be enhanced by objectivity, the board of trustees, shall
appointing a chairperson who is a non- appoint independent trustees and non-
executive, whenever possible. executive members of the board to the
(f) The board of trustees shall assess at greatest extent possible while ensuring that
least annually its performance and such mix will not impair the collective skills,
effectiveness as a body, as well as its various experience, and effectiveness of the
committees, the chief executive officer, the committees.
individual trustee, and the NSSLA itself, (c) The board of trustees shall ensure that
which may be facilitated by the corporate each committee shall maintain appropriate
governance committee or external records (e.g., minutes of meetings or
facilitators. The composition of the board summary of matters reviewed and decisions
shall also be reviewed regularly with the taken) of their deliberations and decisions.
end in view of having a balanced Such records shall document the
membership. Toward this end, a system and committee’s fulfillment of its responsibilities
procedure for evaluation shall be adopted and facilitate the assessment of the effective
which shall include, but not limited to, the dispense of its functions.
setting of benchmark and peer group (d) The board of trustees shall constitute,
analysis. at a minimum, the audit committee. The
(g) The board shall ensure that individual audit committee shall be composed of
members of the board and the members are members with accounting, auditing, or
accurately and timely informed. It shall related financial management expertise or
provide all its trustees and to the members experience commensurate with the size,
a comprehensive and understandable complexity of operations and risk profile of
assessment of the NSSLA’s performance, the NSSLA. To the greatest extent possible,
financial condition and risk exposures. All the audit committee shall be composed of a
trustees shall have reasonable access to any sufficient number of non-executive board
information about the institution at all times. members. Further, the chief executive
It shall also provide appropriate information officer, chief financial officer and/or
that flows internally and to the public. treasurer shall not be appointed as members
(7) To constitute committees to increase of the audit committee.
efficiency and allow deeper focus in specific The audit committee provides oversight
areas. The board of trustees shall create over the institution’s financial reporting
committees, the number and nature of policies, practices and control and internal
which would depend on the size of the and external audit functions. It shall be
NSSLA and the board, the complexity of responsible for the setting up of the internal
operations, long-term strategies and risk audit department and for the appointment
tolerance level of the institution. of the internal auditor as well as the
(a) The board of trustees shall approve, independent external auditor who shall both

Part I - Page 10a
§ 4141S.5
12.12.31
report directly to the audit committee. In operations of an NSSLA on a going-concern

cases of appointment or dismissal of external basis and communicate the same
auditors, it is encouraged that the decision throughout the NSSLA. This shall be
be made only by independent, non- displayed by undertaking timely and
executive audit committee members. It shall effective actions on issues identified.
monitor and evaluate the adequacy and Further, non-executive board members
effectiveness of the internal control system. shall meet regularly, other than in meetings
The audit committee shall review and of the audit committee, in the absence of
approve the audit scope and frequency. It senior management, with the external
shall receive key audit reports, and ensure auditor and heads of the internal audit and
that senior management is taking necessary compliance functions.
corrective actions in a timely manner to b. Specific duties and responsibilities of
address the weaknesses, non-compliance a trustee
with policies, laws and regulations and other (1) To remain fit and proper for the
issues identified by auditors. position for the duration of his term. A
The audit committee shall have explicit trustee is expected to remain fit and proper
authority to investigate any matter within its for the position for the duration of his term.
terms of reference, full access to and He should possess unquestionable
cooperation by management and full credibility to make decisions objectively and
discretion to invite any trustee or executive resist undue influence. He shall treat board
officer to attend its meetings, and adequate trusteeship as a profession and shall have a
resources to enable it to effectively clear understanding of his duties and
discharge its functions. The audit committee responsibilities as well as his role in
shall ensure that a review of the promoting good governance. Hence, he
effectiveness of the institution’s internal shall maintain his professional integrity and
controls, including financial, operational continuously seek to enhance his skills,
and compliance controls, and risk knowledge and understanding of the
management, is conducted at least annually. activities that the trustee is engaged in or
The audit committee shall establish and intends to pursue as well as the
maintain mechanisms by which officers and developments in the NSSLA industry
staff shall, in confidence, raise concerns including regulatory changes through
about possible improprieties or malpractices continuing education or training.
in matters of financial reporting, internal (2) To conduct fair business transactions
control, auditing or other issues to persons with the NSSLA and to ensure that personal
or entities that have the power to take interest does not bias board decisions.
corrective action. It shall ensure that Trustees should, whenever possible, avoid
arrangement are in place for the independent situations that would give rise to a conflict
investigation, appropriate follow-up action, of interest. If transactions with the
and subsequent resolution of complaints. institution cannot be avoided, it should be
(8) To effectively utilize the work done in the regular course of business and
conducted by the internal audit and upon terms not less favorable to the
compliance functions and the external institution than those offered to others. The
auditors. The board of trustees shall basic principle to be observed is that a
recognize and acknowledge the importance trustee should not use his position to make
of the assessment of the independent, profit or to acquire benefit or advantage for
competent and qualified internal and himself and/or his related interests. He
external auditors and compliance officers in should avoid situations that would
ensuring the safety and soundness of the compromise his impartiality.

Part I - Page 10b
§§ 4141S.5 - 4142S.1
12.12.31
(3) To act honestly and in good faith, Corollarily, he should support plans and
with loyalty and in the best interest of the ideas that he thinks will be beneficial to the
NSSLA , its members, regardless of the institution.
amount of their capital contributions, and (8) To have a working knowledge of the
other stakeholders such as its depositors, statutory and regulatory requirements
investors, borrowers, other clients and the affecting the NSSLA institution, including the
general public. A trustee must always act content of its articles of incorporation and
in good faith, with the care which an by-laws, the requirements of the Bangko
ordinarily prudent man would exercise Sentral and where applicable, the
under similar circumstances. While a trustee requirements of other regulatory agencies.
should always strive to promote the interest A trustee should also keep himself informed
of all members, he should also give due of the industry developments and business
regard to the rights and interests of other trends in order to safeguard the institution’s
stakeholders. competitiveness.
(4) To devote time and attention (9) To observe confidentiality. Trustees
necessary to properly discharge their duties must observe the confidentiality of non-
and responsibilities. Trustees should devote public information acquired by reason of
sufficient time to familiarize themselves with their position as trustees. They may not
the institution’s business. They must be disclose said information to any other person
constantly aware of the institution’s without the authority of the board.
condition and be knowledgeable enough to (As amended by Circular Nos.757 dated 08 May 2012 and 749
contribute meaningfully to the board’s work. dated 27 February 2012)
They must attend and actively participate
in board and committee meetings, request Sec. 4142S Definition and Qualifications
and review meeting materials, ask questions, of Officers. Officers shall include the
and request explanations. If a person cannot President, Vice-President, General Manager,
give sufficient time and attention to the Corporate Secretary, Treasurer and others
affairs of the institution, he should neither mentioned as officers of the NSSLA, or
accept his nomination nor run for election whose duties as such are defined in the by-
as member of the board. laws.
(5) To act judiciously. Before deciding The minimum qualifications for trustees
on any matter brought before the board of prescribed in Sec. 4141S are also applicable
trustees, every trustee should thoroughly to officers.
evaluate the issues, ask questions and seek
clarifications when necessary. § 4142S.1 Definition of officers
(6) To contribute significantly to the Officers shall include the president,
decision-making process of the board. executive vice president, senior vice
Trustees should actively participate and president, vice president, general manager,
exercise objective independent judgment on secretary, treasurer, and others mentioned
corporate affairs requiring the decision or as officers of the NSSLA, or those whose
approval of such board. duties as such are defined in the by-laws,
(7) To exercise independent judgment. or are generally known to be the officers of
A trustee should view each problem/ the NSSLA (or any of its branches and offices
situation objectively. When a disagreement other than the head office) either through
with others occurs, he should carefully announcement, representation, publication
evaluate the situation and state his position. or any kind of communication made by the
He should not be afraid to take a position NSSLA. A person holding the position of
even though it might be unpopular. chairman, vice-chairman or any other

Part I - Page 10c
§§ 4142S.1 - 4143S.1
12.12.31
position of the board who also performs of trustees. They shall establish a NSSLA-
functions of management such as those wide management system characterized by
ordinarily performed by regular officers shall strategically aligned and mutually
also be considered an officer. reinforcing performance standards across
the organization.
§ 4142S.2 Qualifications of officers (c) To ensure that duties are effectively
An officer shall have the following delegated to the staff and to establish a
minimum qualifications: management structure that promotes
a. He shall be at least twenty-one (21) accountability and transparency. NSSLA
years of age; officers shall establish measurable
b. He shall be at least a college graduate standards, initiatives and specific
or have at least five (5) years experience in responsibilities and accountabilities for
NSSLA or banking operations or related each NSSLA personnel. NSSLA officers shall
activities or in a field related to his position oversee the performance of these delegated
and responsibilities, or have undergone duties and responsibilities and shall
training in NSSLA or banking operations ultimately be responsible to the board of
acceptable to the appropriate department of trustees for the performance of the NSSLA.
the SES; (d) To promote and strengthen checks
c. He must be fit and proper for the and balances systems in the NSSLA. NSSLA
position of an officer of the NSSLA. In officers shall promote sound internal
determining whether a person is fit and controls and avoid activities that shall
proper for the position of an officer, the compromise the effective dispensing of their
following matters must be considered: functions. Further, they shall ensure that
integrity/probity, competence, education, they give due recognition to the importance
diligence, and experience/training. The of the internal audit, compliance and
foregoing qualifications for officers shall be external audit functions.
(Circular Nos.757 dated 08 May 2012 and 749 dated 27 February
in addition to those already required or 2012)
prescribed by R.A. No. 8367, as amended,
and other existing applicable laws and Sec. 4143S Disqualification of Trustees and
regulations. Officers. The following regulations shall
govern the disqualification of NSSLAs’
§ 4142S.3 Duties and responsibilities trustees and officers.
of officers
(a) To set the tone of good governance § 4143S.1 Persons disqualified to
from the top. NSSLA officers shall promote become trustees. Without prejudice to
the good governance practices within the specific provisions of law prescribing
NSSLA by ensuring that policies on disqualifications for trustees, the following
governance as approved by the board of are disqualified from becoming trustees:
trustees are consistently adopted across the a. Permanently disqualified. Trustees/
NSSLA. officers/employees permanently disqualified
(b) To oversee the day-to-day by the Monetary Board from holding a
management of the NSSLA. NSSLA officers director/trustee position:
shall ensure that NSSLA‘s activities and (1) Persons who have been convicted
operations are consistent with the NSSLA’s by final judgment of a court for offenses
strategic objectives, risk strategy, corporate involving dishonesty or breach of trust such
values and policies as approved by the board as but not limited to, estafa, embezzlement,

Part I - Page10d
§ 4143S.1
12.12.31
extortion, forgery, malversation, swindling, position for a specific/indefinite period of

theft, robbery, falsification, bribery, violation time. Included are:
of B.P. Blg. 22, violation of Anti- Graft and (1) Persons who refuse to fully disclose
Corrupt Practices Act and prohibited acts the extent of their business interest or any
and transactions under Section 7 of material information to the appropriate
R.A. No. 6713 (Code of Conduct and Ethical department of the SES when required
Standards for Public Officials and pursuant to a provision of law or of a circular,
Employees); memorandum, rule or regulation of the
(2) Persons who have been convicted Bangko Sentral. This disqualification shall
by final judgment of a court sentencing them be in effect as long as the refusal persists;
to serve a maximum term of imprisonment (2) Trustees who have been absent or
of more than six (6) years; who have not participated for whatever
(3) Persons who have been convicted reasons in more than fifty percent (50%) of
by final judgment of the court for violation all meetings, both regular and special, of the
of banking/quasi-banking/NSSLA laws, board of trustees during their incumbency,
rules and regulations; and trustees who failed to physically attend
(4) Persons who have been judicially for whatever reasons in at least twenty-five
declared insolvent, spendthrift or percent (25%) of all board meetings in any
incapacitated to contract; year, except that when a notarized
(5) Trustees, officers or employees of certification executed by the corporate
closed banks/QBs/trust entities who were secretary has been submitted attesting that
found to be culpable for such institution’s said trustees were given the agenda materials
closure as determined by the Monetary prior to the meeting and that their
Board; comments/decisions thereon were
(6) Trustees and officers of banks, QBs submitted for deliberation/discussion and
and trust entities found by the Monetary were taken up in the actual board meeting,
Board as administratively liable for violation said trustees shall be considered present in
of banking laws, rules and regulations the board meeting. This disqualification
where a penalty of removal from office is applies only for purposes of the immediately
imposed, and which finding of the Monetary succeeding election;
Board has become final and executory; or (3) Persons who are delinquent in the
(7) Trustees and officers of banks, QBs payment of their obligations as defined
and trust entities or any person found by hereunder:
the Monetary Board to be unfit for the (a) Delinquency in the payment of
position of trustees or officers because they obligations means that an obligation of a
were found administratively liable by person with an NSSLA where he/she is a
another government agency for violation of trustee or officer, or at least two (2)
banking laws, rules and regulations or any obligations with other banks/FIs, under
offense/violation involving dishonesty or different credit lines or loan contracts, are
breach of trust, and which finding of said past due pursuant to existing regulations;
government agency has become final and (b) Obligations shall include all
executory. borrowings from a bank/QB/trust entity/
b. Temporarily disqualified. Trustees/ NSSLA/other FIs obtained by:
officers/employees disqualified by the (i) A trustee or officer for his own
Monetary Board from holding a trustee account or as the representative or agent of

Part I - Page 10e
§ 4143S.1
12.12.31
others or where he/she acts as a guarantor, (iv) A partnership of which a trustee or

endorser or surety for loans from such FIs; officer, or his/her spouse is the managing
(ii) The spouse or child under the partner or a general partner owning a
parental authority of the trustee or officer; controlling interest in the partnership; and
(iii) Any person whose borrowings or (v) A corporation, association or firm
loan proceeds were credited to the account wholly-owned or majority of the capital of
of, or used for the benefit of a trustee or officer; which is owned by any or a group of persons
(Next page is Page 11)

Part I - Page 10f
§ 4143S.1
08.12.31
mentioned in the foregoing Items “(i)”, “(ii)” showing good and justifiable reasons, or
and “(iv)”; after the lapse of five (5) years from the time
This disqualification shall be in effect they were officially advised by the
as long as the delinquency persists. appropriate department of the SES of their
(4) Persons who have been convicted disqualification;
by a court for offenses involving dishonesty (9) Those under preventive suspension;
or breach of trust such as, but not limited (10) Persons with derogatory records as
to, estafa, embezzlement, extortion, forgery, certified by, or on the official files of, the
malversation, swindling, theft, robbery, judiciary, NBI, PNP, quasi-judicial bodies,
falsification, bribery, violation of B.P. Blg. other government agencies, international
22, violation of Anti-Graft and Corrupt police, monetary authorities and similar
Practices Act and prohibited acts and agencies or authorities of foreign countries
transactions under Section 7 of R.A. No. for irregularities or violations of any law,
6713 (Code of Conduct and Ethical rules and regulations that would adversely
Standards for Public Officials and affect the integrity of the trustee/officer or
Employees), violation of banking laws, rules the ability to effectively discharge his duties.
and regulations or those sentenced to serve This disqualification applies until they have
a maximum term of imprisonment of more cleared themselves of the alleged
than six (6) years but whose conviction has irregularities/violations or after a lapse of five
not yet become final and executory; (5) years from the time the complaint, which
(5) Trustees and officers of closed was the basis of the derogatory record, was
banks QBs/trust entities/NSSLAs and other initiated;
FIs under BSP supervision/regulation (11) Trustees and officers of banks, QBs
pending their clearance by the Monetary and trust entities found by the Monetary
Board; Board as administratively liable for violation
(6) Trustees disqualified for failure to of banking laws, rules and regulations
observe/discharge their duties and where a penalty of removal from office is
responsibilities prescribed under existing imposed, and which finding of the Monetary
regulations. This disqualification applies Board is pending appeal before the appellate
until the lapse of the specific period of court, unless execution or enforcement
disqualification or upon approval by the thereof is restrained by the court;
Monetary Board on recommendation by the (12) Trustees and officers of banks, QBs
appropriate department of the SES of such and trust entities or any person found by
trustees’ election/re-election; the Monetary Board to be unfit for the
(7) Trustees who failed to attend the position of trustees or officers because they
special seminar on corporate governance were found administratively liable by
for board of trustees required by BSP. This another government agency for violation of
disqualification applies until the trustee banking laws, rules and regulations or any
concerned had attended such seminar; offense violation involving dishonesty or
(8) Persons dismissed/terminated from breach of trust, and which finding of said
employment for cause. This disqualification government agency is pending appeal before
shall be in effect until they have cleared the appellate court, unless execution or
themselves of involvement in the alleged enforcement thereof is restrained by the
irregularity or upon clearance, on their court; and
request, from the Monetary Board after (13) Trustees and officers of banks, QBs

Part I - Page 11
§§ 4143S.1 - 4143S.3
10.12.31
and trust entities found by the Monetary The spouse or relative within the second
Board as administratively liable for violation degree of consanguinity or affinity of any
of banking laws, rules and regulations person holding the position of manager,
where a penalty of suspension from office cashier, or accountant of a branch or
or fine is imposed, regardless whether the extension office of an NSSLA or their
finding of the Monetary Board is final and respective equivalent positions is
executory or pending appeal before the disqualified from holding or being
appellate court, unless execution or appointed to any of said positions in the
enforcement thereof is restrained by the same branch or extension office.
court. The disqualification shall be in effect c. Except as may otherwise be allowed
during the period of suspension or so long under C.A. No. 108, otherwise known as
as the fine is not fully paid. “The Anti-Dummy Law,” as amended,
(As amended by Circular Nos. 584 dated 28 September 2007 foreigners cannot be officers or employees
and 513 dated 10 February 2006) of NSSLAs; and
d. Any appointive or elective public
§ 4143S.2 Persons disqualified to official, whether full time or part time,
become officers except in cases where such service is
a. The disqualifications for trustees incident to financial assistance provided by
mentioned in Subsec. 4143S.1 shall likewise the government or GOCCs or in cases
apply to officers, except those stated in Items allowed under existing law.
“b(2)” and “b(7)”. (As amended by Circular No. 699 dated 17 November 2010)
b. The spouses or relatives within the
second degree of consanguinity or affinity § 4143S.3 Disqualification procedures
are prohibited from holding officership a. The board of trustees and
positions across the following functional management of every NSSLAs shall be
categories within an NSSLA: responsible for determining the existence
1. Decision making and senior of the ground for disqualification of the
management function, e.g., chairman, NSSLA’s trustee/officer or employee and for
president, chief executive officer (CEO), reporting the same to the BSP. While the
chief operating officer (COO), general concerned NSSLA may conduct its own
manager, and chief financial officer (CFO) investigation and impose appropriate
other than the treasurer or controller; sanction/s as are allowable, this shall be
2. Treasury function, e.g., Treasurer and without prejudice to the authority of the
Vice President – Treasury; Monetary Board to disqualify a trustee/
3. Recordkeeping and financial officer/employee from being elected
reporting functions, e.g., controller and chief appointed as trustee/officer in any FI under
accountant; the supervision of the BSP. Grounds for
4. Safekeeping of assets, e.g., chief disqualification made known to the NSSLA
cashier; shall be reported to the appropriate
5. Risk management function, e.g., chief department of the SES within seventy-two
risk officer; (72) hours from knowledge thereof.
6. Compliance function, e.g., b. On the basis of knowledge and
compliance officer; and evidence on the existence of any of the
7. Internal audit function, e.g., internal grounds for disqualification mentioned in
auditor. Subsecs. 4143S.1 and 4143S.2, the trustee

Part I - Page 12
§ 4143S.3
08.12.31
or officer concerned shall be notified in position. The head of said department may
writing either by personal service or allow an extension on meritorious ground.
through registered mail with registry return c. Upon receipt of the reply/
receipt card at his/her last known address explanation of the trustee/officer
by the appropriate department of the SES of concerned, the appropriate department of
the existence of the ground for his/her the SES shall proceed to evaluate the case.
disqualification and shall be allowed to The trustee/officer concerned shall be
submit within fifteen (15) calendar days from afforded the opportunity to defend/clear
receipt of such notice an explanation on himself/herself.
why he/she should not be disqualified and d. If no reply has been received from
included in the watchlisted file, together the trustee/officer concerned upon the
with the evidence in support of his/her
(Next Page is Part I - Page 13)

Part I - Page 12a
§ 4143S.3
08.12.31
expiration of the period prescribed under concerned department of the SES shall
Item “b” above, said failure to reply shall recommend to the Monetary Board his/her
be deemed a waiver and the appropriate delisting from the masterlist of temporarily
department of the SES shall proceed to disqualified persons and his/her inclusion
evaluate the case based on available in the masterlist of permanently disqualified
records/evidence. persons.
e. If the ground for disqualification is g. If the disqualification is based on
delinquency in the payment of obligation, dismissal from employment for cause, the
the concerned trustee or officer shall be appropriate department of the SES shall, as
given a period of thirty (30) calendar days much as practicable, endeavor to establish
within which to settle said obligation or, the specific acts or omissions constituting
restore it to its current status or, to explain the offense or the ultimate facts which
why he/she should not be disqualified and resulted in the dismissal to be able to
included in the watchlisted file, before the determine if the disqualification of the
evaluation on his disqualification and trustee/officer concerned is warranted or not.
watchlisting is elevated to the Monetary The evaluation of the case shall be made
Board. for the purpose of determining if
f. For trustees/officers of closed QBs, disqualification would be appropriate and
trust entities, NSSLAs or other FIs under not for the purpose of passing judgment on
Bangko Sentral supervision, the concerned the findings and decision of the entity
department of the SES shall make concerned. The appropriate department of
appropriate recommendation to the the SES may decide to recommend to the
Monetary Board clearing said trustees/ Monetary Board a penalty lower than
officers when there is no pending case/ disqualification (e.g., reprimand,
complaint or evidence against them. When suspension, etc.) if, in its judgment the act
there is evidence that a trustees/officer has committed or omitted by the trustee/officer
committed irregularity, the appropriate concerned does not warrant
department of the SES shall make disqualification.
recommendation to the Monetary Board h. All other cases of disqualification,
that his/her case be referred to the OSI for whether permanent or temporary shall be
further investigation and that he/she be elevated to the Monetary Board for approval
included in the masterlist of temporarily and shall be subject to the procedures
disqualified persons until the final provided in paragraphs “a”, “b”, “c” and “d”
resolution of his/her case. Trustees/officers above.
with pending cases/complaints shall also be i. Upon approval by the Monetary
included in said masterlist of temporarily Board, the concerned trustee/officer shall be
disqualified persons upon approval by the informed by the appropriate department of the
Monetary Board until the final resolution of SES in writing either by personal service or
their cases. If the trustee/officer is cleared through registered mail with registry return
from involvement in any irregularity, the receipt card, at his/her last known address of
appropriate department of the SES shall his/her disqualification from being elected/
recommend to the Monetary Board his/her appointed as trustee/officer in any FI under the
delisting. On the other hand, if the trustee supervision of Bangko Sentral and/or of his/
officer concerned is found to be responsible her inclusion in the masterlist of watchlisted
for the closure of the institution, the persons so disqualified.

Part I - Page 13
§§ 4143S.3 - 4143S.6
12.12.31
j. The board of trustees of the § 4143S.5 (Reserved)

concerned institution shall be
immediately informed of cases of § 4143S.6 Watchlisting. To provide the
disqualification approved by the Monetary Bangko Sentral with a central information
Board and shall be directed to act thereon file to be used as reference in passing upon
not later than the following board meeting. and reviewing the qualifications of persons
Within seventy-two (72) hours thereafter, elected or appointed as trustee or officer of
the corporate secretary shall report to the an NSSLA, the SES shall maintain a watchlist
Governor of the Bangko Sentral through of disqualified NSSLA trustees/officers under
the appropriate department of the SES the the following procedures:
action taken by the board on the trustee/ a. Watchlist categories. Watchlisting
officer involved. shall be categorized as follows:
k. Persons who are elected or (1) Disqualification File “A”
appointed as trustee or officer in any of the (Permanent)
Bangko Sentral supervised institutions for the -Trustees/officers/employees
first time but are subject to any of the permanently disqualified by the Monetary
grounds for disqualification provided for Board from holding a trustee/officer position
under Subsecs. 4143S.1 and 4143S.2, shall in any institution under the supervision/
be afforded the procedural due process regulation of Bangko Sentral.
prescribed above. (2) Disqualification File “B”
l. Whenever a trustee/officer is cleared (Temporary)
in the process mentioned under Item “c” -Trustees/officers/employees
above or, when the ground for temporarily disqualified by the Monetary
disqualification ceases to exist, he/she would Board from holding a trustee/officer position
be eligible to become trustee or officer of in any institution under the supervision/
any bank, QB, trust entity or any institution regulation of Bangko Sentral.
under the supervision of the Bangko Sentral b. Inclusion of trustees/officers/
only upon prior approval by the Monetary employees in the watchlist. Upon
Board. It shall be the responsibility of the recommendation by the appropriate
appropriate department of the SES to elevate department of the SES, the inclusion of
to the Monetary Board the lifting of the trustees/officers/employees in watchlist
disqualification of the concerned trustee/ disqualification files “A” and “B” on the
officer and his/her delisting from the basis of decisions, actions or reports of the
masterlist of watchlisted persons. courts, banks, QBs, other NSSLAs and FIs
(As amended by Circular No. 584 dated 28 September 2007) under Bangko Sentral supervision, Bangko
Sentral, NBI or any other administrative
§ 4143S.4 Effect of non-possession of agencies shall first be approved by the
qualifications or possession of Monetary Board.
disqualifications. Trustees/officers elected c. Notification of trustees/officers/
or appointed without possessing the employees. Upon approval by the Monetary
qualifications in Subsecs. 4141S.2/4142S.2 Board, the concerned trustee/officer/
or possessing any of the disqualifications as employee shall be informed through
enumerated in Subsecs.4143S.1/4143S.2, registered mail, with registry return receipt
shall vacate their respective positions card at his/her last known address of his/
immediately. her inclusion in the masterlist of watchlisted

Part I - Page 14
§§ 4143S.6 - 4144S
12.12.31
persons disqualified to be a trustee/officer Monetary Board. Delisting may be

in any FI under the supervision of the approved by the Monetary Board in the
Bangko Sentral. following cases:
d. Confidentiality. Watchlist files shall (1) Watchlist – Disqualification File “B”
be for internal use only of the Bangko Sentral (Temporary) –
and may not be accessed or queried upon (a) After the lapse of the specific period
by outside parties including banks, QBs, of disqualification;
trust corporations, NSSLAs, and such (b) When the conviction by the court
institutions under the supervisory and for crimes involving dishonesty, breach of
regulatory powers of the Bangko Sentral trust and/or violation of banking laws
except with the authority of the person becomes final and executory, in which case
concerned (without prejudice to the the trustee/officer/employee is relisted to
authority of the Governor and the Monetary Watchlist – Disqualification File “A”
Board to authorize release of the (Permanent);
information) and with the approval of the (c) Upon favorable decision or
concerned SES Department Head or SES clearance by the appropriate body, i.e.,
Subsector Head or the Deputy Governor, court, NBI, bank, QB, trust entity or such
SES or the Governor, or the Monetary Board. other agency/body where the concerned
The Bangko Sentral will disclose individual had derogatory record. Trustees/
information on the person included in its officers/employees delisted from the
watchlist files only upon submission of a Watchlist – Disqualification File “B” other
duly notarized authorization from the than those upgraded to Watchlist –
concerned person and approval of such Disqualification File “A” shall be eligible for
request by the concerned SES Department re-employment with any bank, QB, trust
Head or SES Subsector Head or the Deputy entity, NSSLA or other FI under Bangko
Governor, SES or the Governor or the Sentral supervision.
Monetary Board. The prescribed (As amended by Circular No. 758 dated 11 May 2012, CL-2007-
authorization form to be submitted to the 001 dated 04 January 2007 and CL-2006-046 dated 21 December
2006)
appropriate department of the SES is in
Appendix Q-45.
NSSLAs can gain access to said Sec. 4144S Compensation of Trustees,
information in the said watchlist for the Officers and Employees. No trustee, officer
sole purpose of screening their nominees/ or employee of an NSSLA shall receive from
applicants for trustees/officers and/or such NSSLA and no NSSLA shall pay to any
confirming their elected trustees and trustee, officer, or employee of such NSSLA,
appointed officers. NSSLAs must obtain any commission, emolument, gratuity or
the said authorization on an individual reward based on the volume or number of
basis. loans made, or based on the interest or fees
e. Delisting. All delistings shall be collected thereon. Nothing in this Section,
approved by the Monetary Board upon however, prohibits or limits any of the
recommendation of the appropriate following:
department of the SES except in cases of a. Receipt or payment of salaries of
persons known to be dead, where trustees, officers and employees;
delisting shall be automatic upon proof b. Receipt or payment of commissions
of death and need not be elevated to the to agents whether or not based on the

Part I - Page 15
§§ 4144S - 4146S
08.12.31
volume or number of loans or on the all trustees and trustee-officers in excess of

interest and fees collected thereon; or ten percent (10%) thereof per annum shall
c. Receipt or payment of bonuses of require the approval of the Bangko Sentral.
trustees, officers or employees if such
bonuses are based on the profits and not § 4144S.2 Liability for loans contrary
on the volume or number of loans made to law. No NSSLA shall make or purchase
or on the interest or fees collected thereon. any loan or investment not authorized or
To protect the funds of depositors and permitted under R.A. No. 8367, and any
creditors, the Monetary Board may trustee, officer or employee, who on
regulate/restrict the payment by the NSSLA behalf of any such NSSLA, knowingly
of compensation, allowances, fees, makes or purchases any such loan or
bonuses, and fringe benefits to its trustees investment or who knowingly consents
and officers in exceptional cases and thereto shall be personally liable to the
when the circumstances warrant, such as, NSSLA for the full amount of any such
but not limited to the following: loan or investment.
a. When the NSSLA is found by the
Monetary Board to be conducting business Sec. 4145S Bonding of Officers and
in an unsafe or unsound manner; Employees. All officers and employees of
b. When the NSSLA is found by the an NSSLA who, in the regular discharge
Monetary Board to be in an unsatisfactory of their duties have access to money or
financial condition such as, but not limited negotiable securities shall, before entering
to, the following cases: upon such duties, furnish to the
(1) Its capital is impaired; and employing NSSLA a good and sufficient
(2) It has suffered continuous losses from bond and providing for indemnity to the
operations for the past three (3) years. NSSLA against the loss of money or
In the presence of any one (1) or more securities, by reason of their dishonesty.
of the circumstances mentioned above, the The bond of the cashier, assistant cashier,
Monetary Board may impose the following treasurer, and other employees having
restrictions in the compensation and other money accountability shall not be less
benefits of trustees and officers: than their average daily accountability.
(a) Except for the financial assistance to The bond must be issued by a reputable
meet expenses for the medical, maternity, bonding company duly licensed by the
education and other emergency needs of the Insurance Commission and approved by
trustees or officers or their immediate family, the Bangko Sentral. Capital contribution
other forms of financial assistance may be or a cash bond deposited with the NSSLA
suspended. or with a bank, may also be allowed.
(b) When the total compensation
package including salaries, allowances, fees Sec. 4146S Agents and Representatives
and bonuses of trustees and officers are No person shall act as an agent or sales
significantly excessive as compared with representative of an NSSLA or operate an
industry averages, the Monetary Board may agency without obtaining a license from
order their reduction to reasonable levels. the Monetary Board. No license is
required for a collector of an NSSLA but
§ 4144S.1 Compensation increases.All no person shall hold himself out or act as
increases in compensation, in any form, of collector unless he is authorized as a

Part I - Page 16
§§ 4146S - 4151S.1
12.12.31
collector in writing by such NSSLA. line, format attached as Appendix Q-57b),

within ten (10) business days from the
Sec. 4147S Bio-data of Trustees and election of the board of trustees as
Officers provided in the NSSLA’s by-laws, in
a. NSSLAs shall submit to the accordance with Appendix S-2.
appropriate department of the SES a bio- (As amended by Circular No. 758 dated 11 May 2012)
data with ID picture of their trustees/
officers with rank of senior vice president Sec. 4148S Full-Time Manager for NSSLAs
(SVP) and above (or equivalent ranks) NSSLAs with total assets of at least
upon every election/re-election/ P5.0 million shall maintain a full-time
appointment/promotion in a prescribed manager to take charge of the operations
form and for first-time trustees/officers of the NSSLA. The manager shall possess
with rank of SVP and above (or equivalent all the qualifications and shall not have any
ranks) within a particular NSSLA, the duly disqualification under Subsecs. 4142S.2 and
notarized authorization form per 4143S.2, respectively.
Appendix Q-45, within ten (10) business
days from the date of election/re-election Secs. 4149S - 4150S (Reserved)
of the trustees/meeting of the board of
trustees in which the officers are H. BRANCHES AND OTHER OFFICES
appointed/promoted in accordance with
Appendix S-2. Sec. 4151S Establishment of Branches/
The bio-data shall be updated and Extension Offices. Prior Bangko Sentral
submitted in case of change of name due authority shall be obtained before operating
to change in civil status, within ten (10) a branch or other offices.
business days from the date the change
occurred. § 4151S.1 Application.The application
For other officers below the rank of shall be prescribed by the appropriate
SVP, the NSSLA shall not be required to department of the SES and accompanied by
submit their bio-data to the Bangko the following minimum requirements:
Sentral. a. Sketch of the location of the
b. The NSSLA shall, however, keep proposed office which shall be within the
a complete record of the bio-data of all compound of the mother firm’s branch office;
its trustees and officers and shall maintain b. Itemized statement of estimated
a system of updating said records which receipts and expenses of the NSSLA in
shall be made available during on-site connection with such branch or extension
examination or when required by the office;
Bangko Sentral for submission for offsite c. Description or enumeration of
verification. service facilities that will cater to the
c. The NSSLA shall also submit to the deposit and credit needs of members of
appropriate department of the SES a duly the NSSLA;
notarized list of the incumbent members d. Financial statements for the year
of the board of trustees and officers immediately preceding the date of
(President or equivalent rank, down the application;

Part I - Page 16a
§§ 4151S.1 - 4161S.2
08.12.31
e. Certification as to the actual except when extraordinary instances

number of members that will be serviced caused by unforeseen, unavoidable event
by the branch/extension office; and directly affect the NSSLA’s ability to open
f. Undertaking that the branch/ for business. NSSLAs shall post
extension office will service only members conspicuously at all times in their place of
of the NSSLA. business their schedule of regular business
hours and days.
§ 4151S.2 Conditions precluding
acceptance/processing of application. The Secs. 4157S - 4160S (Reserved)
application shall not be accepted/processed
in any of the following cases: J. REPORTS
a. The NSSLA’s operation during the
year immediately preceding the date of Sec. 4161S Records. NSSLAs shall have a
filing of application was unprofitable; true and accurate account, record or
b. Total capital accounts of the statement of their daily transactions. The
NSSLA are less than P100 million as of making of any false entry or the willful
the date of filing of the application; omission of entries relevant to any
c. Total number of members to be transaction is a ground for the Monetary
served in the proposed branch/extension Board for the imposition of administrative
office is less than 500; or sanctions under Section 37 of R.A.
d. Non-compliance by the NSSLA No. 7653, without prejudice to the criminal
with any of the pertinent provisions of liability of the director or officer responsible
banking laws, rules, regulations and therefore under Sections 35 and 36 of R.A.
policies of the BSP. No. 7653 and/or the applicable provisions
of the Revised Penal Code. Records shall
§ 4151S.3 Internal control system. The be up to-date and shall contain sufficient
NSSLA shall submit to the appropriate detail so that an audit trail is established.
department of the SES a system of internal
safeguards and control measures to be § 4161S.1 Uniform System of
adopted for compliance by the staff of the Accounts. NSSLAs are required to pattern
proposed branch/extension office. their charts of accounts and recording
systems after the Uniform System of
§ 4151S.4 Permit to operate. Actual Accounts prescribed for NSSLAs including
operation shall commence only after a reportorial and publication requirements.
permit to operate has been issued by the The voucher system of accounting or the
BSP. ticket system, or such other accounting
system acceptable to the BSP as well as
Secs. 4152S - 4155S (Reserved) the prescribed chart of accounts shall be
adopted for use by NSSLAs.
I. BUSINESS DAYS AND HOURS
§ 4161S.2 Philippine Financial
Sec. 4156S Business Days and Hours Reporting Standards/Philippine Accounting
NSSLAs may, with the prior approval of the Standards
appropriate department of the SES, adopt Statement of policy. It is the policy of
such business days and hours as may be the Bangko Sentral to promote fairness,
convenient for them. NSSLAs shall be open transparency and accuracy in financial
for business during business hours and days reporting. It is in this light that the BSP aims

Part I - Page 17
§§ 4161S.2 - 4162S.1
08.12.31
to adopt all PFRS and PAS issued by the The difference between the fair value and
ASC to the greatest extent possible. the net proceeds of the loan shall be
NSSLAs shall adopt the PFRS and PAS recorded under “Unearned Income-
which are in accordance with GAAP in Others”, which shall be amortized over the
recording transactions and in the term of the loan using the effective interest
preparation of financial statements and method.
reports to BSP. However, in cases where The provisions on government grants
there are differences between BSP shall be applied retroactively to all
regulations and PFRS/PAS as when more outstanding government grants received.
than one (1) option are allowed or certain NSSLAs that adopted an accounting
maximum or minimum limits are treatment other than the foregoing shall
prescribed by the PFRS/PAS, the option or consider the adjustment as a change in
limit prescribed by BSP regulations shall accounting policy, which shall be
be adopted by all NSSLA/FIs. accounted for in accordance with PAS 8.
For purposes hereof, the PFRS/PAS Notwithstanding the exceptions in
shall refer to issuances of the ASC and Items “a”, “b” and “c”, the audited annual
approved by the PRC. financial statements required to be
Accounting treatment for prudential submitted to the BSP in accordance with
reporting. For prudential reporting, FIs shall Appendix S-2 shall in all respect be PFRS/
adopt in all respect the PFRS and PAS PAS compliant: Provided, That FIs shall
except as follows: submit to the BSP adjusting entries
a. In preparing consolidated financial reconciling the balances in the financial
statements, only investments in financial statements for prudential reporting with
allied subsidiaries except insurance that in the audited annual financial
subsidiaries shall be consolidated on a line- statements.
by-line basis; while insurance and non- (As amended by Circular No. 572 dated 22 June 2007)
financial allied subsidiaries shall be
accounted for using the equity method. Sec. 4162S Reports. NSSLAs shall submit
Financial/non-financial allied/non-allied to the appropriate department of the SES
associates shall be accounted for using the the reports in prescribed form listed in
equity method in accordance with the Appendix S-2.
provisions of PAS 28 “Investments in
Associates”; § 4162S.1 Categories and signatories
b. For purposes of preparing separate of reports. For purposes of designating the
financial statements, financial/non-financial signatories of reports, certain weekly,
allied/non-allied subsidiaries/associates, monthly, quarterly, semi-annual, and annual
including insurance subsidiaries/associates, statements/reports required to be submitted
shall also be accounted for using the equity to the BSP are hereby grouped into Category
method; and A-1, A-2, A-3 and Category B, as enumerated
c. FIs shall be required to meet the in Appendix S-3.
BSP recommended valuation reserves. Category A-1 reports shall be signed by
Government grants extended in the form the NSSLA’s chief executive officer (who
of loans bearing nil or low interest rates shall may be the president or chairman of the
be measured upon initial recognition at its board, or designated in the by-laws), or in
fair value (i.e., the present value of the his absence, by the executive vice president
future cash flows of the financial instrument or the officer duly authorized under a
discounted using the market interest rate). resolution approved by the board of

Part I - Page 18
§§ 4162S.1 - 4162S.3
08.12.31
trustees and by the chief finance officer the BSP Regional Offices or by sending
(i.e., controller or chief accountant, who them registered mail or special delivery,
shall likewise be duly authorized by the unless otherwise specified in the circular
NSSLA’s board of trustees in a format or memorandum of the Monetary Board or
prescribed in Appendix S-3a. the BSP.
Category A-2 reports of the head office
of the NSSLA shall be signed by the § 4162S.3 Sanctions and procedures for
NSSLA’s president or senior vice- filing and payment of fines. Failure to submit
president/equivalent position. Offices/units the above reports on or before the specified
(such as branch) reports in this category dates shall subject the person responsible
shall be signed by their respective or entity concerned to the penalties provided
managers/officers-in-charge. Likewise, the by law.
signing authority in this category shall be For willful delay in the submission of
contained in a resolution approved by the reports, the following rules shall apply:
board of trustees in the format prescribed a. Definition of Terms. The following
in Appendix S-3b. definitions shall apply:
Category A-3 and B reports are those (1) Report shall refer to all written
required to be submitted to the BSP and are reports/statements required of an NSSLA
not included in Categories A-1 and A-2. They to be submitted to the BSP periodically or
shall be signed by officers or their alternates, within a specified period.
who shall be duly designated by the board of (2) Willful delay in the submission of
trustees. A copy of the board resolution with reports shall refer to the failure of any
format as prescribed in Appendix S-3c, NSSLA to submit on time the report defined
covering the initial designation and subsequent in Item “(1)” above. Failure to submit a
changes in signatories and alternates, shall be report on time due to fortuitous events, such
submitted to the appropriate department of as fire and other natural calamities and
the SES within three (3) days from the date of public disorders, shall not be considered as
resolution. willful delay.
If a report is submitted to the BSP under (3) Examination shall include, but need not
the signature of an officer who is not listed be limited to, the verification, review, audit,
or included in any of the resolutions investigation and inspection of the books and
mentioned above, the appropriate records, business affairs, administration and
department of the SES shall refuse to financial condition of any NSSLA including the
acknowledge the report as valid or consider reproduction of the records as well as the
the report as not having been submitted at taking possession of the books and records and
all. If such a report is not resubmitted by the keeping them under BSP custody after giving
NSSLA under the signature of a duly proper receipts therefore. It shall also include
authorized signing officer, administrative the interview of the directors and personnel
sanctions/penalties shall be imposed on the of any NSSLA.
erring NSSLA for the late reporting or failure (4) Refusal to permit examination shall
to submit the required report, as the case mean any act or omission which impedes,
may be. delays or obstructs the duly authorized BSP
officer/examiner/employee from conducting
§ 4162S.2 Manner of filing. The an examination, including the act of refusing
submission of the reports shall be effected to honor a letter of authority to examine
by filing them personally with the presented by any officer/examiner/
appropriate department of the SES or with employee of the BSP.

Part I - Page 19
§ 4162S.3
08.12.31
b. Fines for willful delay in The provisions of Section 34 of R. A.

submission of reports. NSSLAs incurring No. 7653 shall apply to any agent,
willful delay in the submission of required manager, or other officer-in-charge of any
reports shall pay a fine in accordance with NSSLA who willfully refuses any lawful
the following schedule: examination into the affairs of such NSSLA.
The willful making of a false statement
(1) For Categories A-1, A-2 and A-3 reports or misleading statement on a material fact
Per day of default to department of the BSP charged with the
until the report is filed P180 regulation of NSSLAs or to his examiner
(2) For Category B reports shall be punished in accordance with
Per day of default Section 36 of R. A. No. 7653.
until the report is filed 60 (2) Procedures in imposing the fine
(a) The BSP officer/examiner/employee
Delay or default shall start to run on the shall report the refusal of the NSSLA to
day following the last day required for the permit examination to the head of the
submission of reports. However, should the appropriate department of BSP, who shall
last day of filing fall on a non-working day forthwith make a written demand upon the
in the locality where the reporting NSSLA NSSLA concerned for such examination.
is situated, delay or default shall start to run If the NSSLA continues to refuse said
on the day following the next working day. examination without any satisfactory
The due date/deadline for submission of explanation therefor, the BSP officer/
reports to BSP as prescribed under Sec. examiner/employee concerned shall
4162S governing the frequency and submit a report to that effect to the
deadlines indicated in Appendix S-2 shall appropriate department head.
be automatically moved to the next (b) The fine shall be imposed starting
business day whenever a half-day on the day following the receipt by the
suspension of business operations in appropriate department of the written
government offices is declared due to an report submitted by the BSP officer/
emergency such as typhoon, floods, etc. examiner/employee concerned regarding
For the purpose of establishing delay or the continued refusal of the NSSLA to
default, the date of acknowledgment by the permit the desired examination.
appropriate department of the SES or the BSP d. Manner of payment or collection
Regional Offices/Units appearing on the of fines. The regulations embodied in Sec.
copies of such reports filed or submitted or 4601S shall be observed in the collection of
the date of mailing postmarked on the the fines from NSSLAs.
envelope/the date of registry or special e. Appeal to the Monetary Board.
delivery receipt, as the case may be, shall NSSLAs may appeal to the Monetary Board
be considered as the date of filing. a ruling of the appropriate department
Delayed schedules/attachments and imposing a fine.
amendments shall be considered late f. Other penalties. The foregoing
reporting subject to above penalties. penalties shall not preclude the application
c. Sanctions for willful refusal to permit of, or shall be without prejudice to, other
examination/making of false statement administrative sanctions as well as to the
(1) Any NSSLA which shall willfully filing of criminal case as provided for in
refuse to permit examination shall pay a fine the other provisions of the law, as may be
of P3,000 daily from the day of refusal and warranted by the nature of the offense.
for as long as such refusal lasts. (As amended by Circular No. 585 dated 15 October 2007)

Part I - Page 20
§§ 4163S - 4164S.3
08.12.31
Sec. 4163S (Reserved) f. Review of the system of assessing

capital in relation to the estimate of
Sec. 4164S Internal Audit Function organizational risk;
Internal audit is an independent, objective g. Transaction testing and assessment
assurance and consulting function established of specific internal control procedures; and
to examine, evaluate and improve the h. Review of the compliance system
effectiveness of risk management, internal and the implementation of established
control, and governance processes of an policies and procedures.
organization.
§ 4164S.3 Qualification standards of
§ 4164S.1 Status. The internal audit the internal auditor. The internal auditor
function must be independent of the of a UB or a KB must be a CPA and must
activities audited and from day-to-day have at least five (5) years experience in
internal control process. It must be free to the regular audit (internal or external) of a
report audit results, findings, opinions, UB or KB as auditor-in-charge, senior
appraisals and other information to the auditor or audit manager. He must possess
appropriate level of management. It shall the knowledge, skills, and other
have authority to directly access and competencies to examine all areas in
communicate with any officer or employee, which the institution operates. Professional
to examine any activity or entity of the competence as well as continuing training
institution, as well as to access any records, and education shall be required to face-up
files or data whenever relevant to the to the increasing complexity and diversity
exercise of its assignment. The Audit of the institution’s operations.
Committee or senior management should The internal auditor of a TB, QB, trust
take all necessary measures to provide the entity or national Coop Bank must be a CPA
appropriate resources and staffing that with at least five (5) years experience in
would enable internal audit to achieve its the regular audit (internal or external) of a
objectives. TB, QB, trust entity or national Coop Bank
as auditor-in-charge, senior auditor or audit
§ 4164S.2 Scope. The scope of internal manager or, in lieu thereof, at least three (3)
audit shall include: years experience in the regular audit (internal
a. Examination and evaluation of the or external) of a UB or KB as auditor-in
adequacy and effectiveness of the internal charge, senior auditor or audit manager.
control systems; The internal auditor of an RB, NSSLA or
b. Review of the application and local Coop Bank must be at least an
effectiveness of risk management Accounting graduate with two (2) years
procedures and risk assessment experience in external audit or in the regular
methodologies; audit of an RB, NSSLA or local Coop Bank
c Review of the management and or, in lieu thereof, at least one (1) year
financial information systems, including the experience in the regular audit (internal or
electronic information system and electronic external) of a UB, KB, TB, QB, trust entity
banking services; or national Coop Bank as auditor-in-charge,
d. Assessment of the accuracy and senior auditor or audit manager.
reliability of the accounting system and of A qualified internal auditor of a UB or a
the resulting financial reports; KB shall be qualified to audit TBs, QBs, trust
e. Review of the systems and entities, national cooperative banks, RBs,
procedures of safeguarding assets; NSSLAs, local cooperative banks,

Part I - Page 21
§§ 4164S.3 - 4172S
08.12.31
subsidiaries and affiliates engaged in allied and the appropriate department of the SES
activities, and other FIs under BSP not later than 120 calendar days after the
supervision. close of the calendar year or the fiscal year
A qualified internal auditor of a TB or adopted by the NSSLA. The report to the
national cooperative bank shall likewise be BSP shall be accompanied by the:
qualified to audit QBs, trust entities, RBs, (1) certification by the external auditor on
NSSLAs, local cooperative banks, the: (a) dates of start and termination of
subsidiaries and affiliates engaged in allied audit; (b) date of submission of the financial
activities, and other financial institutions audit report and certification under oath
under BSP supervision. stating that no material weakness or breach
in the internal control and risk
§ 4164S.4 Code of Ethics and Internal management systems was noted in the
Auditing Standards. The internal auditor course of the audit of the NSSLA to the
should conform with the Code of board of directors; and (c) the absence of
Professional Ethics for CPAs and ensure any direct or indirect financial interest and
compliance with sound internal auditing other circumstances that may impair the
standards, such as the Institute of Internal independence of the external auditor; (2)
Auditors’ International Standards for the reconciliation statement between the AFS
Professional Practice of Internal Auditing and the balance sheet and income
(e-mail: standards@theiia.org; Web: http:// statement for NSSLA submitted to the BSP
www.theiia.org.) and other supplemental including copies of adjusting entries on the
standards issued by regulatory authorities/ reconciling items; and (3) other information
government agencies. The Standards address that may be required by the BSP.
independence and objectivity, professional In addition, the external auditor shall
proficiency, scope of work, performance of be required by the NSSLA to submit to the
audit work, management of internal audit, board of directors, a LOC indicating any
quality assurance reviews, communication material weakness or breach in the
and monitoring of results. institution’s internal control and risk
management systems within thirty (30)
Secs. 4165S - 4170S (Reserved) calendar days after submission of the
financial audit report. If no material
K. INTERNAL CONTROL weakness or breach is noted to warrant the
issuance of an LOC, a Certification under
Sec. 4171S External Auditor. NSSLAs except oath stating that no material weakness or
those with total resources of P10.0 million breach in the internal control and risk
or less, shall engage the services of an management systems was noted in the
independent Certified Public Accountant to course of the audit of the NSSLA shall be
audit their books of accounts at least once a submitted in its stead, together with the
year, or as often as necessary. financial audit report.
Material weakness shall be defined as a
Sec. 4172S Financial Audit. NSSLAs shall significant control deficiency, or
cause an annual financial audit by an combination of deficiencies, that results in
external auditor acceptable to the BSP not more than a remote likelihood that a material
later than thirty (30) calendar days after the misstatement of the financial statements will
close of the calendar year or the fiscal year not be detected or prevented by the entity’s
adopted by the NSSLA. Report of such audit internal control. A material weakness does
shall be submitted to the board of directors not mean that a material misstatement has

Part I - Page 22
§ 4172S
08.12.31
occurred or will occur, but that it could be exempt from the aforementioned
occur. A control deficiency exists when annual financial audit by an acceptable
the design or operation of a control does external auditor: Provided, That when
not allow management or employees, in warranted by supervisory concern such as
the normal course of performing their material weakness/breach in internal
assigned functions, to prevent or detect control and/or risk management systems,
misstatements on a timely basis. A the Monetary Board may, upon
significant deficiency is a control recommendation of the appropriate
deficiency, or combination of control department of the SES, require the
deficiencies, that adversely affects the financial audit to be conducted by an
entity’s ability to initiate, authorize, external auditor acceptable to the Bangko
record, process, or report financial data Sentral, at the expense of the institution
reliably in accordance with GAAP. The concerned: Provided further, That when
term more than remote likelihood shall circumstances such as, but not limited to,
mean that future events are likely to occur loans from multilateral financial institutions,
or are reasonably possible to occur. privatization, or public listing warrant, the
The board of directors, in a regular or financial audit of the concerned institution
special meeting, shall consider and act on by an acceptable external auditor may also
the financial audit report and the be allowed.
certification under oath submitted in lieu NSSLAs under the concurrent
of the LOC and shall submit, within thirty jurisdiction of the Bangko Sentral and COA
(30) banking days after receipt of the shall, however, submit a copy of the AAR
reports, a copy of its resolution to the of the COA to the appropriate department
appropriate department of the SES. The of the SES within thirty (30) banking days
resolution shall show, among other after receipt of the report by the board of
things, the actions(s) taken on the reports directors. The AAR shall be accompanied
and the names of the directors present and by the: (1) certification by the institution
absent. concerned on the date of receipt of the AAR
The board shall likewise consider and by the board of directors; (2) reconciliation
act on the LOC and shall submit, within statement between the AFS in the AAR and
thirty (30) banking days after receipt the balance sheet and income statement of
thereof, a copy of its resolution together the NSSLA submitted to the Bangko Sentral,
with said LOC to the appropriate including copies of adjusting entries on the
department of the SES. The resolution reconciling items; and (3) other information
shall show the action(s) taken on the that may be required by the Bangko Sentral.
findings and recommendations and, the The board of directors of said
names of the directors present and absent, institutions, in a regular or special
among other things. meeting, shall consider and act on the
The LOC shall be accompanied by the AAR, as well as on the comments and
certification of the external auditor of the observations and shall submit, within
date of its submission to the board of thirty (30) banking days after receipt of the
directors. report, a copy of its resolution to the
NSSLAs under Bangko Sentral appropriate department of the SES. The
supervision which are under the resolution shall show the action(s) taken
concurrent jurisdiction of the COA shall on the report, including the comments and

Part I - Page 23
§§ 4172S - 4174S
12.12.31
observations and the names of the § 4172S.2 Posting of audited financial

directors present and absent, among other statements. NSSLAs shall post in
things. conspicuous places in their head offices, all
NSSLAs as well as external auditors their branches and other offices, as well as
shall strictly observe the requirements in in their respective websites, their latest
the submission of the financial audit report financial audit report.
and reports required to be submitted under (Circular No. 540 dated 09 August 2006)
Appendix Q-33.
The audited annual financial Sec. 4173S (Reserved)
statements required to be submitted shall
in all respect be PFRS/PAS compliant: Sec. 4174S Risk Management
Provided, That NSSLAs shall submit to the Function. The risk management function
Bangko Sentral adjusting entries is generally responsible for:
reconciling the balances in the financial (a) identifying the key risk exposures
statements for prudential reporting with and assessing and measuring the extent of
that in the audited annual financial risk exposures of the NSSLA and its trust
statements. operations;
The reports and certifications of (b) monitoring the risk exposures and
institutions concerned, schedules and determining the corresponding capital
attachments required under this Subsection requirement in accordance with the Basel
shall be considered Category B reports, capital adequacy framework and based on
delayed submission of which shall be the NSSLA’s internal capital adequacy
subject to the penalties under Subsec. assessment on an on-going basis;
4162S.3 (c) monitoring and assessing decisions
(As amended by Circular Nos. 554 dated 22 December 2006 to accept particular risks whether these are
and 540 dated 09 August 2006) consistent with board approved policies on
risk tolerance and the effectiveness of the
§ 4172S.1 Audited Financial Statements corresponding risk mitigation measures; and
of NSSLAs. The following rules shall govern (d) reporting on a regular basis to senior
the utilization and submission of AFS of management and to the board of directors
NSSLAs. of the results of assessment and monitoring.
For purposes of this Section, AFS shall Risk management personnel shall
include the balance sheets, income possess sufficient experience and
statements, statements of changes in equity, qualifications, including knowledge on the
statements of cash flows and notes to NSSLA business, the developments in the
financial statements which shall include market, industry and product lines, as well
among other information, disclosure of the as mastery of risk disciplines. They shall
volume of past due loans as well as loan- have the ability and willingness to challenge
loss provisions. On the other hand, financial business lines regarding all aspects of risk
audit report shall refer to the AFS and the arising from the NSSLA’s activities.
opinion of the auditor. The AFS of NSSLAs Chief Risk Officer (CRO). NSSLA may
with subsidiaries shall be presented side by appoint a CRO, or any equivalent position,
side on a solo basis (parent) and on a who shall be independent from executive
consolidated basis (parent and subsidiaries). functions and business line responsibilities,
(Circular No. 540 dated 09 August 2006) operations and revenue-generating

Part I - Page 24
§§ 4174S - 4180S
12.12.31
functions. This independence shall be govern the selection and delisting by the
displayed in practice at all times as such, Bangko Sentral of covered institutions which
the CRO shall report directly to the board under special laws are subject to Bangko
of trustees or to the risk oversight committee Sentral supervision.
without any impediment. Statement of policy. It is the policy of
The CRO shall have sufficient stature, the Bangko Sentral to ensure effective audit
authority and seniority within the NSSLA. and supervision of banks, QBs, trust entities
This will be assessed based on the ability and/or NSSLAs including their subsidiaries
of the CRO to influence decisions that affect and affiliates engaged in allied activities and
the NSSLA’s exposure to risk. The CRO shall other FIs which under special laws are
have the ability, without compromising his subject to Bangko Sentral supervision, and
independence, to engage in discussion with to ensure the reliance by Bangko Sentral and
the board of trustees, chief executive officer the public on the opinion of external auditors
and other senior management on key risk and auditing firms by prescribing the rules
issues and to access such information as he and regulations that shall govern the
deems necessary to form his or her selection, appointment, reporting
judgment. The CRO shall meet with the requirements and delisting for external
board of directors/risk oversight committee auditors and auditing firms of said
on a regular basis and such meetings shall institutions, subject to the binding provisions
be duly minuted and adequately of and implementing regulations pursuant
documented. to the aforesaid MOA.
CROs shall be appointed and replaced a. Rules and regulations. The revised
with prior approval of the board of trustees. rules and regulations that shall govern the
In cases, when the CRO will be replaced, selection and delisting by the Bangko Sentral
the NSSLA shall report the same to the of covered institutions which under special
appropriate department of the SES within laws are subject to Bangko Sentral
five (5) days from the time it has been supervision are shown in Appendix S-8.
approved by the board of trustees. Sanctions. The applicable sanctions/
(Circular Nos.757 dated 08 May 2012 and 749 dated 27 February penalties prescribed under Sections 36 and
2012) 37 of R.A. 7653 to the extent applicable
shall be imposed on the covered institutions,
Secs. 4175S - 4179S (Reserved) its audit committee and the directors
approving the hiring of external auditor/
Sec. 4180S Selection, Appointment, auditing firm who/which are not in the
Reporting Requirements and Delisting of Bangko Sentral list of selected auditors for
External Auditors and/or Auditing Firm; covered institutions or for hiring, and/or
Sanction. Pursuant to Section 58, R.A. No. retaining the services of the external auditor/
8791, and the existing provisions of the auditing firm in violation of any of the
executed Memorandum of Agreement provisions of this Section and for non-
(MOA) dated 12 August 2009, binding the compliance with the Monetary Board
Bangko Sentral, SEC, PRC - BOA and the IC directive under Item “K” in Appendix S-8.
for a simplified and synchronized Erring external auditors/auditing firm may
accreditation requirements for external also be reported by the Bangko Sentral to
auditor and/or auditing firm, following are the PRC for appropriate disciplinary action.
(As amended by Circular Nos. 660 dated 25 August 2009 and
the revised rules and regulations that shall
529 dated 11 May 2006)

Part I - Page 25
§§ 4181S - 4191S
12.12.31
L. MISCELLANEOUS PROVISIONS and Loan Association”. Such NSSLAs shall

display in a conspicuous place at their
Sec. 4181S Publication Requirements business offices a sign including, among
NSSLAs shall, within 120 calendar days after other things, the following words:
the close of the calendar year or their fiscal “Authorized by the Bangko Sentral ng
year, as the case may be, furnish the Pilipinas”.
Monetary Board and post in any of the (As amended by CL Nos. 2008-053 dated 21 August 2008 and
NSSLAs’ bulletin boards or in any other 2008-007 dated 05 February 2008)
conspicuous place a copy of their financial
statements showing, in such form and detail Sec. 4183S Prohibitions
as the Monetary Board shall require, the a. No person, association,
amount and character of the assets and partnership or corporation shall do
liabilities of the NSSLAs at the end of the business as an NSSLA, or shall use the
preceding fiscal year. The Monetary Board terms “Savings and Loan Association” or
may, in addition to the foregoing, require any other title or name tending to give the
the disclosure of such other information as public impression that it is engaged in the
it shall deem necessary for the protection of operations and activities of an NSSLA
the members of the NSSLA. unless so authorized under R.A. No. 8367
The consolidated statements of and these regulations.
condition of an NSSLA and its subsidiaries b. The use by an NSSLA of any other
and associates shall conform with the name or title or combination of names and
guidelines of PAS 27 “Consolidated and titles or any other deviation from the
Separate Financial Statements”, except that requirements of this Section shall not be
for purposes of consolidated financial authorized except upon prior approval of
statements, only investments in financial the Monetary Board.
allied subsidiaries except insurance c. NSSLAs shall not issue, publish or
subsidiaries shall be consolidated on a cause or permit to be issued or published,
line-by-line basis; while insurance and any advertisement that it is doing or
non-financial allied subsidiaries shall be permitted to do business which is prohibited
accounted for using the equity method. by law to an NSSLA.
Financial/non-financial allied/non-allied d. No NSSLA shall advertise or
associates shall be accounted for using the represent itself to its members or to the
equity method in accordance with the public as a bank, or as a trust company.
provisions of PAS 28 “Investments in
Associates”. For purposes of separate Secs. 4184S - 4189S (Reserved)
financial statements, investments in
financial/non-financial allied/non-allied Sec. 4190S Guidelines on Outsourcing
subsidiaries/associates, including The rules on outsourcing of banking functions
insurance subsidiaries/associates, shall be as shown in Appendix Q-37 shall be adopted
accounted for using the equity method. insofar as they are applicable to NSSLAs.
(As amended by Circular No. 494 dated 20 September 2005) (As amended by Circular Nos. 764 dated 03 August 2012, 642
dated 30 January 2009, 610 dated 26 May 2008, 596 dated 11
January 2008, 548 dated 25 September 2006 and 543 dated 08
Sec. 4182S Business Name 1. NSSLAs
September 2006)
organized or operating under R.A. No. 8367
and licensed by the Bangko Sentral shall
Sec. 4191S (Reserved)
include in their names the words “Savings
1
See SEC Circular Nos. 5 dated 17 July 2008 and 14 dated 24 October 2000

Part I - Page 26
§§ 4192S - 4196S
13.12.31
Sec. 4192S Prompt Corrective Action managing market risk are continuously
Framework. The framework for the evolving. As such, the guidelines are
enforcement of PCA on banks which is in intended for general application; specific
Appendix Q-40 shall govern the PCA taken application will depend to some extent on
on NSSLAs to the extent applicable, or by the size, complexity and range of activities
analogy. undertaken by NSSLAs.
(Circular No. 523 dated 31 March 2006, as amended by Circular (Circular No. 544 dated 15 September 2006)
No. 664 dated 15 September 2009)
Sec. 4195S Liquidity Risk Management
Sec. 4193S Supervision by Risks. The The guidelines on liquidity risk management
guidelines on supervision by risk in for QBs as shown in Appendix Q-44 shall
Appendix Q-42 which provide guidance on govern the liquidity risk management of
how QBs should identify, measure, monitor NSSLAs to the extent applicable.
and control risks shall govern the The guidelines set forth the expectations
supervision by risks of NSSLAs to the extent of the Bangko Sentral with respect to the
applicable. management of liquidity risk and are
The guidelines set forth the expectation intended to provide more consistency in
of the Bangko Sentral with respect to the how the risk-focused supervision function
management of risks and are intended to is applied to this risk. NSSLAs are expected
provide more consistency in how the risk- to have an integrated approach to risk
focused supervision function is applied to management to identify, measure, monitor
these risks. The Bangko Sentral will review and control risks. Liquidity risk should be
the risks to ensure that an NSSLA’s internal reviewed together with other risks to
risk management processes are integrated determine overall risk profile.
and comprehensive. All NSSLAs should These guidelines are intended for
follow the guidance in risk management general application; specific application will
efforts.
depend on the size and sophistication of a
(Circular No. 510 dated 03 February 2006)
particular NSSLA and the nature and
complexity of its activities.
Sec. 4194S Market Risk Management (Circular No. 545 dated 15 September 2006)
The guidelines on market risk management
for QBs as shown in Appendix Q-43 shall Sec. 4196S Information Technology Risk
govern the market risk management of Management (ITRM). The enhanced
NSSLAs to the extent applicable. guidelines on ITRM keep abreast with the
The guidelines set forth the expectations aggressive and widespread adoption of
of the Bangko Sentral with respect to the technology in the financial service industry
management of market risk and are intended and consequently strengthen existing
to provide more consistency in how the risk- Bangko Sentral framework for IT risk
focused supervision is applied to this risk. supervision. ITRM should be considered a
NSSLAs are expected to have an integrated component and integrated with the
approach to risk management to identify, institutions’ risk management program. The
measure, monitor and control risks. Market guidelines likewise provide practical plans
risk should be reviewed together with other
to address risks associated with emerging
risks to determine overall risk profile.
trends in technology and growing concerns
The Bangko Sentral is aware of the
on cyber security.
increasing diversity of financial products and
that industry techniques for measuring and (Circular No. 808 dated 22 August 2013)
Manual of Regulations for Non-Banks Financial Institutions S Regulations

Part I - Page 27
§§ 4196S.1 - 4196S.3
13.12.31
§ 4196S.1 Declaration of policy. A additional regulations on new and emerging

growing number of Bangko Sentral products, services, delivery channels, and
supervised institutions (BSIs) employ the other significant applications of technology.
advances in technology as leverage to offer Subject guidelines, including the
innovative products, deliver fast and efficient Appendices Q-59a, Q-59b, Q-59c, Q-59d,
service at affordable prices, and venture to Q-59e and Q-59f, are not “one-size-fits-all”
new markets. Moreover, technology drives and implementation of these need to be risk-
the efficiency of operations and financial based and commensurate with size, nature
accounting of these institutions, and and types of products and services and
improves their decision-making process. As complexity of IT operations of the individual
technology becomes an integral part of the BSIs. BSIs shall exercise sound judgment in
business and operations of BSIs, such determining applicable provisions relevant
technology usage and dependence, if not to their risk profile.
properly managed, may heighten technology (Circular No. 808 dated 22 August 2013)
risks. The Bangko Sentral expects BSIs to
have the knowledge and skills necessary to § 4196S.3 Complexity of IT risk profile
understand and effectively manage The Bangko Sentral shall risk profile all BSIs
technology risks. These institutions are and classify them as either “Complex” or
required to have an integrated approach to “Simple”. The assessment of complexity of
risk management to identify, measure, IT risk profile is based largely on the degree
monitor and control risks. of adoption of technology and considers
(Circular No. 808 dated 22 August 2013) size, nature and types of products and
services and complexity of IT operations
§ 4196S.2 Purpose and scope. The among the risk factors. In assessing IT
enhanced guidelines aim to provide operations, the nature of IT organization,
guidance in managing risks associated with degree of automation of core processes and
use of technology. The guidelines outlined applications and extent and reach of online
are based on international standards and branch network are likewise considered.
recognized principles of international A BSI with “Complex” IT risk profile is
practice for ITRM and shall serve as Bangko highly dependent on technology. IT
Sentral’s baseline requirement for all BSIs. components are integral to the core business
The guidelines shall apply to BSIs which activities that major weaknesses on IT
include banks, non-banks with quasi- systems, maintenance and support, if not
banking function (NBQB), non-bank properly addressed, may cause operational
electronic money issuers and other non-bank inefficiencies, business disruptions and/or
institutions which under existing Bangko financial losses. On the other hand, a BSI
Sentral rules and regulations and special with “Simple” IT risk profile relies or
laws are subject to Bangko Sentral depends less on technology in the
supervision and/or regulation. Moreover, operations of its business, thus, is not
subject guidelines shall also apply to BSIs affected or lowly impacted by IT-related
with offshore data processing as may be risks.
appropriate to their situation. The Non-bank institutions which under
framework covers different facets of ITRM, existing Bangko Sentral rules and regulations
some of which are supplemented with and special laws are subject to Bangko
detailed guidelines in Appendices Q-59a, Sentral supervision/regulation shall be
Q-59b, Q-59c, Q-59d, Q-59e and Q-59f. notified in writing of their classification
The Bangko Sentral shall keep the immediately after 14 September 2013.
Appendices updated and, in the future, issue (Circular No. 808 dated 22 August 2013)
S Regulations Manual of Regulations for Non-Banks Financial Institutions

Part I - Page 28
§§ 4196S.4 - 4196S.5
13.12.31
§ 4196S.4 IT rating system.The Bangko Terminology Definitions

Sentral, in the course of its on-site incorporated or
examination activities, shall evaluate BSIs’ established outside the
ITRM system and measure the results based Philippines, this
on Bangko Sentral’s IT rating system. A may refer to the
composite rating is assigned based on a “1” functional oversight
to “4” numerical scale, as follows: equivalent such as
the Country Head
4 BSIs with this rating exhibit strong
(for foreign banks) or
performance in every respect.
management
Noted weaknesses in IT are minor
committee or body
in nature and can be easily
empowered with
corrected during the normal
oversight and
course of business.
supervision
3 BSIs with this rating exhibit
responsibilities.
satisfactory performance but may
Cyberfraud A deliberate act of
demonstrate modest weaknesses
omission or
in operating performance,
commission by any
monitoring, management
person carried out
processes or system development.
using the Internet and/
or other electronic
2 BSIs with this rating exhibit less
channels, in order to
than satisfactory performance and
communicate false or
require considerable degree of
fraudulent
supervision due to a combination
representations to
of weaknesses that may range
prospective victims,
from moderate to severe.
to conduct fraudulent
transactions, or to
1 BSIs with this rating exhibit
transmit the proceeds
deficient IT environment that may
of fraud to FIs
impair the future viability of the
connected with the
entity, thereby requiring
perpetrator. Examples
immediate remedial action.
of cyberfraud in the
(Circular No. 808 dated 22 August 2013)
financial industry may
§ 4196S.5 Definition of terms. In these include, but are not
guidelines, terms are used with the limited to, theft of
following meanings: credit card data,
computer hacking,
Terminology Definitions
electronic identity
Board of The governing body
theft, phishing scams,
Directors elected by the
ATM skimming and
(Board) stockholders that
non-delivery of
exercises the corporate
merchandise
powers of a locally
purhased online,
incorporated BSI. In
among others.
case of a BSI

Part I - Page 29
§ 4196S.5
13.12.31
Terminology Definitions Terminology Definitions
Electronic The delivery of Encryption A data security
Products and banking and financial technique used to
Services products and services protect information
through electronic, from unauthorized
interactive inspection or alteration.
communication Information is encoded
channels which so that data appears as
include automated meaningless string of
letters and symbols
teller machines
during delivery or
(ATMs), point of sales
transmission. Upon
(POS) terminals,
receipt, the information
internet, mobile
is decoded using an
phones, touch tone
encryption key.
telephones and Enterprise- Extending throughout
other similar wide Level or involving an entire
electronic devices. institution rather than
These encompass a single business
electronic banking, department or function.
electronic payments, In this document, the
electronic money and words "enterprise-wide"
other electronic and "organization-wide"
products and services are interchangeably
offered by BSIs. used.
EMV (stands It is a global standard Information Encompass people and
for Europay, for credit, debit Asset/ organization, IT
Mastercard and prepaid Resources processes, physical
and Visa) payment cards based infrastructure (i.e.
on chip card facilities, equipment),
technology. EMV chip- IT infrastructure
based payment cards, (including computing
also known as smart hardware, network
cards, contain an infrastructure,
embedded middleware) and other
microprocessor, a type enterprise architecture
of small computer. The components (including
microprocessor chip information,
contains the information applications).
needed to use the card Information The protection of
for payment, and is Security information assets from
protected by various unauthorized access,
security features. Chip use, disclosure,
disruption, modification
cards are a more secure
or destruction in order
alternative to traditional
to provide
magnetic stripe
confidentiality, integrity
payment cards.
and availability.

Part I - Page 30
§ 4196S.5
13.12.31
Information A single or a series of undertakes to provide
Security unwanted or to a BSI all or part of an
Incident unexpected IT function or service.
information security A BSI would use IT
events that have a outsourcing for
significant probability functions ranging from
of compromising infrastructure to
business operations software development,
and threatening the maintenance and
confidentiality,
support. The related
integrity or availability
IT service is integral to
of BSI's information or
information systems. the provision by BSI of
Information Automated means of a financial service and
Technology originating, processing, the BSI is dependent
(IT) storing and on the service on an
communicating ongoing basis.
information and covers IT Risk Any potential adverse
recording devices, outcome, damage, loss,
communications violation, failure or
network, computer disruption associated
systems (including with the use of or
hardware and software reliance on computer
components and data) hardware, software,
and other electronic devices, systems,
devices. applications and
IT Group/ The unit of an
networks.
Department organization within a
IT Strategic A long-term plan (i.e.,
BSI responsible for the
Plan three (3)- to five (5)- year
activities of IT
operations control, horizon) in which
monitoring of IT business and IT
services, infrastructure management
support and a cooperatively describe
combination of how IT resources will
technology, people contribute to the
and processes. institution's strategic
IT Operations Encompasses all objectives.
processes and services IT Risk Risk management
that are provisioned by Management system that enables a
an IT Unit to internal System BSI to identify, measure,
and external clients. (ITRMS) monitor and control
IT An arrangement under IT-related risks.
Outsourcing which another party
Management A general term for the
(either an affiliated
Information computer systems in an
entity within a
System (MIS) institution that provide
corporate group or an
entity external to the information about its
corporate group) business operations.

Part I - Page 31
§§ 4196S.5- 4196S.6
13.12.31

Network Two (2) or more a guaranteed level of
computer systems that system performance as
are grouped together to it relates to downtime
share information, or uptime, a specified
software and hardware. level of customer
Offshore BSIs Have their critical support and what
system processing and software or hardware
data located outside of will be provided and
the Philippines. These for what fee.
are usually maintained Triple Data A mode of the DES
and operated by Encryption encryption algorithm
organizations within Standard that encrypts data three
the same business group (3DES) times. Three 64-bit keys
that the BSIs belong to, are used, instead of one,
such as their head office, for an overall key length
subsidiary and/or of 192 bits (the first
affiliate. Locally- encryption is encrypted
maintained systems, if with second key, and
any, are limited to non- the resulting cipher text
core supporting is again encrypted with
applications such as a third key)
collaboration systems (Circular No. 808 dated 22 August 2013)
and report processing
tools. § 4196S.6 Description of IT-related
Project Planning, monitoring risks. As BSIs increase their reliance on IT
Management and controlling an to deliver products and services,
activity. inappropriate usage of IT resources may
Senior Officers of the have significant risk exposures. While IT
Management/ institution given the does not trigger new types of risks, it brings
Management authority by the Board in new dimensions to traditional banking
to implement the risks (i.e. strategic risk, credit risk, market
policies it has laid risk, liquidity risk and operational risk) that
down in the conduct require new or enhanced control activities
of the business of the (e.g. a failure of a credit risk measurement
institution. application is an IT failure and, therefore, a
Service Level Establishes mutual
systems failure in the sense of operational
Agreement expectations and
risk). Moreover, IT is an implied part of any
provide a baseline to
system of internal controls, regardless of the
measure IT
type of risk and, consequently, forms an
performance. An SLA
important element in organization-wide risk
should contain,
among others, the management. Among the risks associated
specified level of with the use of IT are the following:
service, support 1. Operational risk is the risk to earnings
options, enforcement and capital arising from problems with
or penalty provisions service or product delivery. This risk is a
for services not provided, function of internal controls, IT systems,

Part I - Page 32
§§ 4196S.6- 4196S.7
13.12.31
employee integrity and operating processes. technologies being installed by BSIs. As
Operational risk exists in all products and progress in technology shifts to higher gear,
services; the trend in cyber-attacks, intrusions, and
2. Strategic risk is the risk to earnings other form of incidents on computer systems
and capital arising from adverse business shows that it will not only persist but will
decisions on IT-related investments or continue to increase in frequency and spread
improper implementation of those in magnitude.
decisions. The risk is a function of the Management of IT risks and information
compatibility of an organization’s strategic security issues becomes a necessity and an
goals, the business strategies developed to important part of BSIs’ risk management
achieve those goals, the resources deployed system. BSIs are therefore required to
against these goals and the quality of establish a robust ITRM system covering four
implementation. The resources needed to (4) key components: 1) IT governance,
carry out business strategies are both 2) risk identification and assessment, 3) IT
tangible and intangible which include controls implementation, and 4) risk
communication channels, operating measurement and monitoring.
systems, delivery networks and managerial 1. IT Governance. This is an integral
capacities and capabilities; part of BSIs’ governance framework and
3. Reputation risk is the risk to earnings consists of the leadership and organizational
and capital arising from negative public structures and processes that ensure the
opinion. This affects the institution’s ability alignment of IT strategic plan with BSIs’
to establish new relationships or services business strategy, optimization of resources
or continue servicing existing relationships. management, IT value delivery, performance
The risk can expose the institution to measurement and the effective and efficient
litigation, financial loss or damage to its use of IT to achieve business objectives and
reputation; and effective IT risk management
4. Compliance risk is the risk to earnings implementation. BSIs must establish an
and capital arising from the violations of, effective IT governance framework covering
or non-conformance with laws, rules and the following:
regulations, prescribed practices or ethical a. Oversight and organization of IT
standards. Compliance risk also arises in functions. Accountability is a key concern
situations where the laws and rules of IT governance and this can be obtained
governing certain products activities of the with an organizational structure that has
BSI’s clients may be ambiguous or untested. well-defined roles for the responsibility of
Compliance risk exposes the institution to information, business processes,
monetary penalties, non-monetary sanctions applications, IT infrastructure, etc.
and possibility of contracts being annulled The Board of Directors is ultimately
or declared unenforceable. responsible for understanding the IT risks
(Circular No. 808 dated 22 August 2013) confronted by a BSI and ensuring that they
are properly managed, whereas the Senior
§ 4196S.7 IT Risk Management System
Management is accountable for designing
(ITRMS). As BSIs become more dependent
and implementing the ITRMS approved by
on IT systems and processes, technology
the Board. For Complex BSIs, the Board may
risks and information security issues have
delegate to an IT Steering Committee (ITSC)
become progressively more complex and
or its equivalent IT oversight function to
pressing in recent years. Information
cohesively monitor IT performance and
security is just as important as the new
institute appropriate actions to ensure

Part I - Page 33
§ 4196S.7
13.12.31
achievement of desired results. The ITSC, the IT budget and maintain responsibility
at a minimum, should have as members a for performance management, IT acquisition
non-executive Board director who oversees oversight, professional development and
the institution’s IT function, the head of IT training. The IT Head should be a member
group/department, and the highest rank of executive management with direct
officer who oversees the business user involvement in key decisions for the BSI and
groups. The head of control groups should usually reports directly to the President or
participate in ITSC meetings in advisory Chief Executive Officer.
capacity only. A clear description of roles and
A charter should be ratified by the Board responsibilities for individual IT functions
to clearly define the roles and should be documented and approved by the
responsibilities of the ITSC. Formal minutes Board. Proper segregation of duties within
of meeting should be maintained to and among the various IT functions should
document its discussions and decisions. The be implemented to reduce the possibility
ITSC should regularly provide adequate for an individual to compromise a critical
information to the Board regarding IT process. A mechanism should be in place
performance, status of major IT projects or to ensure that personnel are performing only
other significant issues to enable the Board the functions relevant to their respective jobs
to make well-informed decisions about the and positions. In the event that an institution
BSIs’ IT operations. finds it difficult to segregate certain IT control
BSIs should develop an IT strategic plan responsibilities, it should put in place
that is aligned with the institution’s business adequate compensating controls (e.g. peer
strategy. This should be undertaken to reviews) to mitigate the associated risks.
manage and direct all IT resources in line b. IT policies, procedures and
with the business strategy and priorities. IT standards. IT controls, policies, and
strategic plan should focus on long term procedures are the foundation of IT
goals covering three (3)- to five (5)- year governance structure. It helps articulate the
horizon and should be sufficiently rules and procedures for making IT
supplemented by tactical IT plans which decisions, and helps to set, attain, and
specify concise objectives, action plans and monitor IT objectives.
tasks that are understood and accepted by BSIs should adopt and enforce IT-related
both business and IT. The IT strategic plan policies and procedures that are well-
should be formally documented, endorsed defined and frequently communicated to
by the Board and communicated to all establish and delineate duties and
stakeholders. It should be reviewed and responsibilities of personnel for better
updated regularly for new risks or coordination, effective and consistent
opportunities to maximize the value of IT to performance of tasks, and quicker training
the institution. of new employees. Management should
BSIs should also create an organization ensure that policies, procedures, and
of IT functions that will effectively deliver systems are current and well-documented.
IT services to business units. For “Complex” The ITSC should review IT policies,
BSIs, a full-time IT Head or equivalent rank procedures, and standards at least on an
should be designated to take the lead in key annual basis. Any updates and changes
IT initiatives and oversee the effectiveness should be clearly documented and properly
of the IT organization. In addition to approved. IT policies and procedures
managing the delivery of day-to-day IT should include at least the following areas:
services, the IT Head should also oversee • IT Governance/Management;

Part I - Page 34
§ 4196S.7
13.12.31
• Development and Acquisition; • Documentation of IT audits,

• IT Operations; including work papers, audit reports, and
• Communication networks; follow-up.
• Information security; In case in-house IT audit expertise is not
• Electronic Banking/Electronic available, such as for a simple BSI, the IT
Products and Services; and audit support may be performed by external
• IT Outsourcing/Vendor Management. specialists and auditors of other institutions
For simple BSIs, some of the above areas consistent with existing Bangko Sentral rules
(i.e. development, electronic banking, etc.) and regulations on outsourcing. (Detailed
may not be applicable, thus sound judgment guidelines/standards on IT Audit are shown
should be employed to ensure that the BSI’s in Appendix Q-59a)
IT policies and procedures have adequately d. Staff competence and training. The
covered all applicable areas. rapid development in technology demands
c. IT audit. Audit plays a key role in appropriate, skilled personnel to remain
assisting the Board in the discharge of its competent and meet the required level of
corporate governance responsibilities by expertise on an ongoing basis.
performing an independent assessment of BSIs should have an effective IT human
technology risk management process and resources management plan that meets the
IT controls. requirements for IT and the business lines it
Auditors provide an assurance that supports. Management should allocate
important control mechanisms are in place sufficient resources to hire and train
for detecting deficiencies and managing risks employees to ensure that they have the
in the implementation of IT. They should expertise necessary to perform their job and
be qualified to assess the specific risks that achieve organizational goals and objectives.
arise from specific uses of IT. BSIs should Management needs to ensure that
establish effective audit programs that cover staffing levels are sufficient to handle present
IT risk exposures throughout the and expected work demands, and to cater
organization, risk-focused, promote sound reasonably for staff turnover. Appropriate
IT controls, ensure the timely resolution of succession and transition strategies for key
audit deficiencies and periodic reporting to officers and personnel should be in place
the Board on the effectiveness of institution’s to provide for a smooth transition in the
IT risk management, internal controls, and event of turnover in vital IT management or
IT governance. Regardless of size and operations functions.
complexity, the IT audit program should e. Management Information Systems
cover the following: (MIS). The BSIs’ IT organization often
• Independence of the IT audit provides an important support role for their
function and its reporting relationship to the MIS. Accurate and timely MIS reports are
Board or its Audit Committee; an essential component of prudent and
• Expertise and size of the audit staff reasonable business decisions. At the most
relative to the IT environment; senior levels, MIS provides the data and
• Identification of the IT audit information to help the Board and
universe, risk assessment, scope, and management make strategic decisions. At
frequency of IT audits; other levels, MIS allows management to
• Processes in place to ensure timely monitor the institution’s activities and
tracking and resolution of reported distribute information to other employees,
weaknesses; and customers, and members of management.

Part I - Page 35
§ 4196S.7
13.12.31
Advances in technology have increased • formulation of a remedial plan to

the volume of information available to reduce risk; and
management and directors for planning and • approval of risk acknowledgement
decision-making. However, if technology from the owner of the risk and senior
is not properly managed, the potential for management.
inaccurate reporting and flawed decision ITRM processes should be integrated
making increases. Because report into the enterprise-wide risk management
generation systems can rely on manual data processes to allow BSIs to make well-
entry or extract data from many different informed decisions involving business plans
financial and transaction systems, and strategies, risk responses, risk tolerance
management should establish appropriate levels and capital management, among
control procedures to ensure information is others.
correct, relevant, and adequately protected. 2. Risk identification and assessment.
Since MIS can originate from multiple BSIs should maintain a risk assessment
equipment platforms and systems, the process that drives response selection and
controls should ensure all information controls implementation. An effective IT
systems have sufficient and appropriate assessment process begins with the
controls to maintain the integrity of the identification of the current and prospective
information and the processing
IT risk exposures arising from the
environment. Sound fundamental principles
institution’s IT environment and related
for MIS review include proper internal
processes. The assessments should identify
controls, operating procedures, safeguards,
all information assets, any foreseeable
and audit coverage.
internal and external threats to these assets,
f. IT risk management function.
the likelihood of the threats, and the
Management of risk is a cornerstone of IT
adequacy of existing controls to mitigate the
Governance. BSIs should have a policy
identified risks. Management should
requiring the conduct of identification,
measurement, monitoring and controlling of continually compare its risk exposure to the
IT risks for each business function/service value of its business activities to determine
on a periodic basis. BSIs should define and acceptable risk levels.
assign these critical roles to a risk Once management understands the
management unit or to a group of persons institution’s IT environment and analyzes
from different units collectively performing the risk, it should rank the risks and prioritize
the tasks defined for this function. its response. The probability of occurrence
The function should have a formal and the magnitude of impact provide the
technology risk acknowledgement and foundation for reducing risk exposures or
acceptance process by the owner of risk to establishing mitigating controls for safe,
help facilitate the process of reviewing, sound, and efficient IT operations
evaluating and approving any major appropriate to the complexity of the
incidents of non-compliance with IT control organization. Periodic risk assessment
policies. The process can be supported by process should be done at the enterprise-
the following: wide level and an effective monitoring
• a description of risk being program for the risk mitigation activities
considered for acknowledgement by owner should be manifested through mitigation or
of risk and an assessment of the risk that is corrective action plans, assignment of
being accepted; responsibilities and accountability and
• identification of mitigating controls; management reporting.

Part I - Page 36
§ 4196S.7
13.12.31
3. IT controls implementation. Controls organization-wide IS program. The duly

comprise of policies, procedures, practices appointed ISO should have sufficient
and organizational structures designed to knowledge, background, and training, as
provide reasonable assurance that business well as organizational position, to enable
objectives will be achieved and undesired him to perform assigned tasks. To ensure
events will be mitigated. Management appropriate segregation of duties, the ISO
should establish an adequate and effective should report directly to the Board or senior
system of internal controls based on the management and have sufficient
degree of exposure and the potential risk of independence to perform his mandate. The
loss arising from the use of IT. Controls for ISO should perform the tasks of a risk
IT environment generally should address the manager and not a production resource
overall integrity of the environment and assigned to the IT department. In the case
should include clear and measurable of simple BSIs, hiring a personnel to
performance goals, the allocation of specific specifically perform the function of an ISO
responsibilities for key project may not be necessary. The ISO function
implementation, and independent may be assigned to an existing independent
mechanisms that will both measure risks officer who meets the requirements
and minimize excessive risk-taking. BSI mentioned in this Subsection. (Detailed
Management should implement satisfactory guidelines/standards on Information Security
control practices that address the following are shown in Appendix Q-59b)
as part of its overall IT risk mitigation b. Project management/development
strategy: 1) Information security; 2) Project and acquisition and change management.
management/development and acquisition BSIs should establish a framework for
and change management; 3) IT operations; management of IT-related projects. The
4) IT outsourcing/Vendor management; and framework should clearly specify the
5) Electronic banking, Electronic payments, appropriate project management
Electronic money and other Electronic methodology that will govern the process
products and services. of developing, implementing and
a. Information security. Information is maintaining major IT systems. The
a vital asset that must be managed to support methodology, on the other hand, should
BSI management in making decisions. BSIs cover allocation of responsibilities, activity
should have a comprehensive information breakdown, budgeting of time and
security program, approved by the Board, resources, milestones, checkpoints, key
to maintain the confidentiality, integrity, and dependencies, quality assurance, risk
availability of computer systems for reliable assessment and approvals, among others.
and timely information. Unauthorized In the acquisition and/or development of IT
access, destruction, or disclosure of solutions, BSIs should ensure that business
confidential information can adversely affect and regulatory requirements are satisfied.
earnings and capital. The program should (Detailed guidelines/standards on Project
monitor information security function Management/ Development and Acquisition
throughout the organization’s business and Change Management are shown in
processes and establish clear accountability Appendix Q-59c)
for carrying out security responsibilities. c. IT operations. IT has become an
The Board or Senior Management integral part of the day-to-day business
should appoint an independent information operation, automating and providing
security officer (ISO) who will be support to nearly all of the business
responsible and accountable for the processes and functions within the

Part I - Page 37
§ 4196S.7
13.12.31
institution. Therefore, the IT systems should responsibility for the outsourced activity.
be reliable, secure and available when Moreover, the risks associated with the
needed which translates to high levels of outsourced activity may be realized in a
service and dependency on IT to operate. different manner than if the functions were
One of the primary responsibilities of inside the institution resulting in the need
IT operations management is to ensure the for controls designed to monitor such risks.
institution’s current and planned BSI management should implement an
infrastructure is sufficient to accomplish its effective outsourcing oversight program that
strategic plans. BSI management should provides the framework for management to
ensure that IT operates in a safe, sound, and understand, monitor, measure, and control
efficient manner throughout the institution. the risks associated with outsourcing. BSIs
Given that most IT systems are outsourcing IT services should have a
interconnected and interdependent, failure comprehensive outsourcing risk
to adequately supervise any part of the IT management process which provides
environment can heighten potential risks for guidance on the following areas: 1) risk
all elements of IT operations and the assessment; 2) selection of service
performance of the critical business lines of providers; 3) contract review; and
the BSIs. Such scenario necessitates the 4) monitoring of service providers. Detailed
coordination of IT controls throughout the guidelines/standards on IT Outsourcing/
institution’s operating environment. Vendor Management and on the adoption
(Detailed guidelines/standards on IT of outsourced cloud computing model are
Operations are shown in Appendix Q-59d) shown in Appendix Q-59e.
d. IT outsourcing/vendor management e. Electronic products and services. The
program. IT outsourcing refers to any evolution in technology revolutionized the
contractual agreement between a BSI and a way banking and financial products and
service provider or vendor for the latter to services are delivered. Physical barriers
create, maintain, or reengineer the were brought down enabling clients to
institution’s IT architecture, systems and access their accounts, make transactions or
related processes on a continuing basis. A gather information on financial products and
BSI may outsource IT systems and processes services anywhere they are, at any time of
except those functions expressly prohibited the day and at their own convenience. As
by existing regulations. The decision to development in technology continues to
outsource should fit into the institution’s accelerate, innovative electronic products
overall strategic plan and corporate and services are foreseen to bring more
objectives and said arrangement should accessibility and efficiency. However, BSIs
comply with the provisions of existing may be confronted with challenges relating
Bangko Sentral rules and regulations on to capacity, availability and reliability of the
outsourcing. Although the technology electronic services. Likewise, fraudulent
needed to support business objectives is activities via electronic channels are also
often a critical factor in deciding to rising in number.
outsource, managing such relationships BSIs should protect customers from
should be viewed as an enterprise-wide fraudulent schemes done electronically.
corporate management issue, rather than a Otherwise, consumer confidence to use
mere IT issue. electronic channels as safe and reliable
While IT outsourcing transfers method of making transactions will be
operational responsibility to the service eroded. To mitigate the impact of cyber
provider, the BSIs retain ultimate fraud, BSIs should adopt aggressive security

Part I - Page 38
§ 4196S.7
13.12.31
posture such as the following: should be submitted to management to

i. The entire ATM system shall be provide assurance that established controls
upgraded/converted to allow adoption of are functioning effectively, resources are
end-to-end Triple DES (3DES) encryption operating properly and used efficiently and
standards by 01 January 2015. The 3DES IT operations are performing within
encryption standards shall cover the whole established parameters. Any deviation noted
ATM network which consists of the host in the process should be evaluated and
processors, switches, host security module management should initiate remedial action
(HSM), automated teller machines (ATMs), to address underlying causes. The scope
point-of-sale (POS) terminals and all and frequency of these performance
communication links connected to the measurement activities will depend on the
network; complexity of the BSI’s IT risk profile and
ii. ATMs to be installed after should cover, among others, the following:
14 September 2013 should be 3DES a. Performance vis-à-vis approved IT
compliant; and strategic plan. As part of both planning and
iii. ATMs, POS terminals and payment monitoring mechanisms, BSI management
cards are also vulnerable to skimming should periodically assess its uses of IT as
attacks due to the lack of deployment of part of overall business planning. Such an
globally recognized EMV enabled
enterprise-wide and ongoing approach
technology by BSIs. Magnetic stripe only
helps to ensure that all major IT projects are
ATMs, POS Terminals and cards are largely
consistent with the BSI’s overall strategic
defenseless against modern fraud
goals. Periodic monitoring of IT
techniques. Therefore, all concerned BSIs
performance against established plans shall
should shift from magnetic stripe technology
confirm whether IT strategic plans remain
to EMV chip-enabled cards, POS Terminals
in alignment with the business strategy and
and ATMs. The entire payment card
the IT performance supports the planned
network should be migrated to EMV by
01 January 2017. This requirement shall strategy.
cover both issuing and acquiring programs b. Performance benchmarks/service
of concerned BSIs. A written and Board- levels. BSIs should establish performance
approved EMV migration plan should be benchmarks or standards for IT functions
submitted to Bangko Sentral within six (6) and monitor them on a regular basis. Such
months from 22 August 2013. Likewise, the monitoring can identify potential problem
detailed guidelines covering subject EMV areas and provide assurance that IT
requirement shall be issued separately. functions are meeting the objectives. Areas
Detailed guidelines/standards on to consider include system and network
Electronic Products and Services are shown availability, data center availability, system
in Appendix Q-59f. reruns, out of balance conditions, response
4. Risk measurement and monitoring. time, error rates, data entry volumes, special
BSI Management should monitor IT risks requests, and problem reports.
and the effectiveness of established controls Management should properly define
through periodic measurement of IT services and service level agreements (SLA)
activities based on internally established that must be monitored and measured in
standards and industry benchmarks to assess terms understandable to the business units.
the effectiveness and efficiency of existing SLA with business units and IT department
operations. Timely, accurate, and complete should be established to provide a baseline
risk monitoring and assessment reports to measure IT performance.

Part I - Page 39
§§ 4196S.7- 4196S.9
13.12.31
c. Quality assurance/quality control. following:

BSI should establish quality assurance (QA) 1. Annual IT Profile, electronically to
and quality control (QC) procedures for all the Bangko Sentral Supervisory Data Center
significant activities, both internal and (SDC) within twenty five (25) days from the
external, to ensure that IT is delivering value end of reference year (Guidelines to be
to business in a cost effective manner and observed in the preparation and submission
promotes continuous improvement through of this report was issued under Bangko
ongoing monitoring. QA activities ensure Sentral Memorandum to All Banks No.
that product conforms to specification and M-2012-011 dated 17 February 2012);
is fit for use while QC procedures identify 2. Report on breach in information
weaknesses in work products and to avoid security, especially incidents involving the
the resource drain and expense of redoing use of electronic channels, pursuant to the
a task. The personnel performing QA and provisions of Items “a” or “b” of Appendix
QC reviews should be independent of the Q-60 following the guidelines provided in
product/process being reviewed and use Item “d” thereof. Depending on the nature
quantifiable indicators to ensure objective and seriousness of the incident, Bangko
assessment of the effectiveness of IT Sentral may require the BSI to provide
activities in delivering IT capabilities and further information or updates on the
services. reported incident until the matter is finally
d. Policy compliance. BSIs should resolved; and
develop, implement, and monitor processes 3. Notification letter to the Core
to measure IT compliance with their Information Technology Specialist Group
established policies and standards as well (CITSG) of the Bangko Sentral of disruption
as regulatory requirements. In addition to of IT services/operations that resulted to the
the traditional reliance on internal and third activation of disaster recovery and business
party audit functions, BSIs should perform continuity plan immediately upon activation
self-assessments on a periodic basis to gauge of the plan.
performance which often lead to early
(Circular No. 808 dated 22 August 2013)
identification of emerging or changing risks
requiring policy changes and updates. § 4196S.9 Sanctions and penalties. BSIs
e. External assessment program. should make available IT policies and
Complex BSIs may also seek regular procedures on the foregoing and other
assurance that IT assets are appropriately related documents during the on-site
secured and that their IT security risk examination as well as provide a copy
management framework is effective. This
thereof when written request was made to
may be executed through a formal external
determine their compliance with this
assessment program that facilitates a
Section.
systematic assessment of the IT security risk
and control environment over time. Any violation of the provisions of this
(Circular No. 808 dated 22 August 2013) Section, its appendices and annexes, shall
be subject to the monetary and non-
§ 4196S.8 Reports. To enable the monetary sanctions provided under Section
Bangko Sentral to regularly monitor IT risk 37 of R.A. No. 7653. Enforcement actions
profile and electronic products, services, shall be imposed on the basis of the overall
delivery channels, processes and other assessment of BSIs’ ITRMS. Whenever a
relevant information regarding the use of BSI’s ITRMS is rated “1” pursuant to
technology, BSIs are required to submit the Subsection 4196S.4, the following

Part I - Page 40
§§ 4196S.9- 4199S
13.12.31
additional sanctions may be imposed: Secs. 4197S - 4198S (Reserved)

1. Suspension/revocation of authority
to provide electronic products and services; Sec. 4199S General Provision on Sanctions
and Unless otherwise provided, any violation of
2. Prohibition against offering/ the provisions of this Part shall be subject
provision of new electronic products and to the sanctions provided in Sections 34, 35,
services. 36 and 37 of R.A. No. 7653, whenever
(Circular No. 808 dated 22 August 2013) applicable.

Part I - Page 41
§§ 4201S - 4240S
08.12.31
PART TWO
DEPOSIT AND BORROWING OPERATIONS
A. DEMAND DEPOSITS may be charged by the NSSLA for every

withdrawal made in excess of the maximum
Section 4201S Checking Accounts. No number allowed in any one (1) month.
NSSLA shall have or carry upon its books
for any person any demand, commercial Sec. 4209S Dormant Savings Deposits
or checking account, or any credit to be NSSLAs may charge a fee, the amount of
withdrawn upon the presentation of any which shall be approved by the BSP for
negotiable check or draft. the maintenance of dormant savings
deposits. Savings deposit shall be classified
Secs. 4202S - 4205S (Reserved) as dormant if no deposit or withdrawal has
been made for the last two (2) years.
B. SAVINGS DEPOSITS
Secs. 4210S – 4215S (Reserved)
Sec. 4206S Definition. Savings deposits
are deposits evidenced by a passbook C. (RESERVED)
consisting of funds deposited to the credit
of one (1) or more individuals with respect Secs. 4216S - 4220S (Reserved)
to which the depositor may withdraw
anytime, unless prior notice in writing of D. TIME DEPOSITS
an intended withdrawal is required by the
NSSLA. Sec. 4221S (Reserved)
Sec. 4207S Minimum Deposit. Savings Sec. 4222S Minimum Term and Size of
deposits with NSSLAs may be opened Time Deposits
with a minimum deposit of P100. a. Term - No time deposit shall be
accepted for a term of less than thirty (30)
Sec. 4208S Withdrawals. Withdrawal days.
from a savings deposit shall be made b. Minimum Size - NSSLAs shall not
through the presentation to the NSSLA of require a minimum amount of time
a duly accomplished withdrawal slip deposit greater than P1,000.
together with the depositor’s passbook.
NSSLAs shall reserve the right to Sec. 4223S Withdrawals of Time
require the depositor to give prior written Deposits. The withdrawal of a time
notice of withdrawal of not more than thirty deposit can be made only by presentation
(30) days. of the certificate of time deposit on the
NSSLAs may limit the number of day of or after its maturity.
withdrawals that a depositor may make:
Provided, That the number of the Secs. 4224S - 4230S (Reserved)
withdrawals allowed shall not be less than
three (3) times a month. A service charge E. - F. (RESERVED)
to be determined by the board of trustees
of the NSSLA and approved by the BSP, Secs. 4231S - 4240S (Reserved)

Part II - Page 1
§§ 4241S - 4261S.5
08.12.31
G. INTEREST ON DEPOSITS deposit account for himself, provided he

has sufficient discretion. However, he
Sec. 4241S Interest on Savings Deposits cannot withdraw therefrom, except
Savings deposits of NSSLAs shall not be through, or with the assistance of a guardian
subject to any interest rate ceiling. authorized to act for him. Parents may
deposit for their minor children, and
Sec. 4242S Interest on Time Deposits guardians for their wards.
Interest on time deposits shall not be subject Notwithstanding the provisions of the
to any interest rate ceiling. preceding paragraph, the cashier,
bookkeeper and their assistants, and other
§ 4242S.1 Time of payment. Interest employees of an NSSLA whose duties entail
on time deposits may be paid at maturity the handling of cash or checks are prohibited
or upon withdrawal or in advance: from opening savings deposit accounts with
Provided, however, That interest paid in the head office or branch of the NSSLA in
advance shall not exceed the interest for which they are assigned as such.
one (1) year.
§ 4261S.2 Identification of member-
§ 4242S.2 Treatment of matured depositors. NSSLAs shall be responsible
time deposits. A time deposit not for the proper identification of their
withdrawn or renewed on its due date shall member-depositors.
be treated as a savings deposit and shall
earn an interest from maturity to the date § 4261S.3 Number of deposit accounts
of actual withdrawal or renewal at a rate A member-depositor may open and have
applicable to savings deposits. more than one (1) savings deposit in his own
name in the same capacity, and he may open
Secs.4243S - 4250S (Reserved) and have various deposits in different
capacities such as guardian, agent, or trustee
for others.
H. (RESERVED)
§ 4261S.4 Signature card. A signature
Secs. 4251S – 4260S (Reserved) card bearing at least three (3) specimen
signatures of each member-depositor shall
I. SUNDRY PROVISIONS ON be required upon opening of a deposit
DEPOSIT OPERATIONS account.
Sec. 4261S Opening and Operation of § 4261S.5 Passbook and certificate

Deposit Accounts. The following are basic of time deposit. A savings deposit
provisions on the opening and operation of passbook, signed by the receiving teller and
deposit accounts of NSSLAs. an authorized officer, shall be issued to a
member-depositor showing, among other
§ 4261S.1 Who may open deposit things, his name and address, account
accounts. Only members who have number, date, amount of deposit, interest
contributed P1,000 or more to the capital credits and balance. NSSLAs shall pre-
of the NSSLA may open deposit accounts number their savings deposit passbooks. In
with NSSLAs. A natural person, although the case of a time deposit, a certificate of
lacking capacity to contract, may time deposit signed by two (2) authorized
nevertheless open a savings or time officers, shall be issued to the member-

Part II - Page 2
§§ 4261S.5 - 4299S
08.12.31
depositor containing, among other things, public lending institution, and from private
his name, amount of deposit, date when banking institutions, and such private
the deposit was made, its due date and lending institutions as may be approved
interest rate. by the Monetary Board: Provided, That
the proceeds of such loan shall be used
§ 4261S.6 Deposits in checks and exclusively to meet the normal credit
other cash items. Checks and other cash requirements of its members. The
items may be accepted for deposit by Monetary Board may, in meritorious
NSSLAs: Provided, That withdrawals cases, raise the ceiling on the borrowing
from such deposits shall not be made until capacity of an NSSLA to not more than
the check or other cash item is collected. thirty percent (30%) of its total assets.
NSSLAs organized by employees of an
Secs. 4262S - 4280S (Reserved) entity or a corporation may borrow funds
from said entity or corporation, but not
J. (RESERVED) vice-versa.
Secs. 4281S - 4285S (Reserved) Secs. 4287S - 4298S (Reserved)
K. OTHER BORROWINGS Sec. 4299S General Provision on

Sanctions. Unless otherwise provided,
Sec. 4286S Borrowings. An NSSLA may any violation of the provisions of this Part
borrow money or incur such obligation up shall be subject to the sanctions provided
to not more than twenty percent (20%) of in Sections 34, 35, 36 and 37 of R.A. No.
the total assets of the NSSLA, from any 7653, whenever applicable.

Part II - Page 3
§§ 4301S - 4301S.1
13.12.31
PART THREE
LOANS AND INVESTMENTS
A. LOANS IN GENERAL other things, the following in the definition

of its loan products:
Section 4301S Lending Policies. It shall be (1) the nature or purpose of the loan;
the responsibility of the board of trustees of (2) the repayment capacity and
NSSLAs to formulate written policies on the circumstances of the member-borrower;
extension of credit. Well-defined lending (3) terms of the loan; and
policies and sound credit risk management (4) normal loan collection cycles.
practices are essential if NSSLAs are to The definitions and characterization of
perform their lending function effectively all loan products shall be embodied in a
and minimize the risk inherent in any product manual approved by the board of
extension of credit. The responsibility trustees. The product manual shall, at a
should be approached in a way that will minimum, contain the term of the loan, the
provide assurance to the members, other maturity of which shall in no case exceed
stakeholders and the supervisory authority the maximum provided under Item “d” of
that timely and adequate action will be taken this Subsection, interest rate, net-take home
to maintain the quality of the loan portfolio. pay requirement vis-a-vis the type of
(As amended by Circular No. 789 dated 28 February 2013) member-borrower, repayment terms,
collection scheme, documentary
§ 4301S.1 (2012-4301S) Authority; loan requirements and applicable work-out
limits; maturity of loans. The board of strategies. The normal collection period,
trustees of NSSLAs shall be responsible for which refers to the normal period of time
the design of appropriate loan products in within which the Association is able to effect
accordance with the Association’s business the first periodic amortization/salary
strategies and its members’ requirements. deduction for amortization of a loan
The board of trustees shall ensure that they reckoned from loan release date, shall
fully understand all the risks attendant to the likewise be set by the NSSLA’s board of
Association’s lending activities and shall trustees and shall be based on the recent
adopt appropriate risk management policies historical experience of the NSSLA (e.g., last
and practices that are commensurate to the three years) and/or the remittance period
risk attendant to their operations, and which, specified in contracts entered into with
at a minimum, shall comply with the private companies or department/branch/
regulations and standards prescribed herein. office of government employing the NSSLA’s
NSSLAs deemed to be engaged in hazardous members. The NSSLA’s normal collection
lending practices shall be cited as operating period and the manner by which it is
in an unsafe and unsound manner. established shall be set forth in the NSSLA’s
a. Loans products. NSSLAs may grant loan policies and considered in its overall
loans to members to service the needs of risk assets review system in order to reflect
households by providing long term financing the true status of loan accounts and ensure
for home building and development, for that adequate loss reserves are provided. In
personal finance and for agricultural and no case, however, shall the normal
entrepreneurial projects. The board of collection period exceed six (6) months from
trustees of NSSLAs shall consider, among the date of release of the loan.

Part III - Page 1
§§ 4301S.1 - 4302S
13.12.31
b. Loan limit to a single borrower. An maturities not exceeding twenty-five (25)

NSSLA may grant loans not exceeding the years and medium or long-term loans to
amount deposited and/or contributed by the finance agricultural projects.
member-borrower plus his twelve (12) (As amended by Circular No. 789 dated 28 February 2013)
months salary or retirement pension from
his employment, or up to seventy percent Sec. 4302S Basic Requirements in
(70%) of the fair market value of any Granting Loans
property acceptable as collateral on first a. Application. A member-borrower
mortgage that he may put up by way of applying for a loan must submit an
security: Provided, That direct indebtedness application stating the purpose of the loan
to an NSSLA of any member-borrower for and such other information as may be
money borrowed with the exception of required by the NSSLA. The loan
money borrowed against obligations of the application and other required documents
Bangko Sentral or of the Philippine shall form part of credit information file of
Government, or borrowed with the full the member-borrower in the NSSLA.
guarantee of the Philippine Government in b. Credit investigation. No loan shall
the payment of principal and interest, shall be approved unless prior investigation has
not exceed fifteen percent (15%) of the been made to determine the credit standing
unimpaired capital and surplus of the of the applicant and/or the fair market value
NSSLA. of the property offered as security and the
For purposes of this Section, regular report thereon shall be made part of the
income of persons who are self-employed loan application: Provided, however, That
shall be their average monthly income this requirement may be waived by an
during the twelve (12)-month period NSSLA in the case of permanent employee
immediately preceding the date of loan or wage earner who is borrowing an
application. amount not exceeding his deposit plus his
c. Limitations on lending authority. twelve (12) months regular salary or
NSSLAs shall not commit to make any loan retirement pension.
for amounts in excess of the total of the c. Credit information file/collateral
following amounts: file. An NSSLA shall maintain as far as
(1) Amount of cash available for loan practicable, a credit information file which
purposes; must contain, among other things, the
(2) Amount of cash which can be readily member-borrower’s application and
realized upon the sale or redemption of financial record. Other information relative
permissible investments made by NSSLAs; to the member-borrower, where
and applicable, shall also be maintained which
(3) Amount of credit available for loan must contain among other things, the
purposes from government or private FIs. collateral and other documents pertinent
d. Maximum loan maturity. No loan to the loan.
granted by NSSLAs shall have a maturity d. Loan approvals. Loans shall be
date of more than five (5) years except loans approved by the NSSLA’s board of trustees
on the security of unencumbered real estate or if approved by a body or officer/s duly
for the purpose of home building and home authorized by the board, such loan must
development which may be granted with be confirmed by the board of trustees.

Part III - Page 2
§§ 4302S - 4305S.5
13.12.31
e. Loan agreements. For each loan Sec. 4305S Interest and Other Charges. The
granted by an NSSLA, a promissory note following rules shall govern the rates of
must be executed by the member-borrower interest and other charges on loans granted
in favor of the NSSLA expressing such by NSSLAs.
particulars as the amount of the loan, date
granted, due date, interest rate and other §§ 4305S.1 - 4305S.2 (Reserved)
similar information.
f. Inscription of lien. In case of § 4305S.3 Interest in the absence of
mortgage loans, no release against an stipulation. The rate of interest for the loan
approved loan shall be made before the or forbearance of any money, goods or
inscription of the mortgage. credit and the rate allowed in judgments, in
the absence of express contract as to such
rate of interest, shall be six percent (6%) per
Sec. 4303S Loan Proceeds. NSSLAs shall
annum.
in no case require member-borrowers to
(As amended by Circular No. 799 dated 21 June 2013)
deposit a portion of the loan proceeds,
whether in the form of savings or time
§ 4305S.4 Escalation clause; when
deposits. Where, subsequent to the release allowable. Parties to an agreement
of the loan proceeds, member-borrowers pertaining to a loan or forbearance of
open deposit accounts or make additional money, goods or credits may stipulate
deposits to their existing accounts, no part that the rate of interest agreed upon may
of such new deposits shall be covered by a be increased in the event that the
stipulation prohibiting or limiting applicable maximum rate of interest is
withdrawal while new portion of their loans increased by the Monetary Board:
are outstanding: Provided, however, That Provided, That such stipulations are
this prohibition shall not apply in cases of valid only if there is also a stipulation
loans secured by a hold-out on deposits to in the agreement that the rate of interest
the extent of the unencumbered amount of agreed upon shall be reduced in the
the deposit existing at the time of the filing event that the applicable maximum rate
of the above-mentioned loan application. of interest is reduced by law or by the
Monetary Board: Provided, further, That
Sec. 4304S Loan Repayment. The the adjustment in the rate of interest
treasurer, cashier or paymaster of the firm agreed upon shall take effect on or after
employing a member-borrower shall be the effectivity of the increase or decrease
required, pursuant to R.A. No. 8367, to in the maximum rate of interest.
make deductions from the salary, wage,
income or retirement pension of the § 4305S.5 Interest accrual on past
member-borrower in accordance with the due loans. NSSLAs shall not accrue
terms of his loan, and all other deductions interest income on loans which are
authorized by the member-borrower, to already past due or on loan installments
remit such deductions to the NSSLA which are in arrears, regardless of
concerned and to collect such reasonable whether the loans are secured or
fee for his services as may be authorized unsecured. Interest on past due loans or
by rules promulgated by the Monetary loan installments in arrears shall be taken
Board. up as income only when actual payments
thereon are received.

Part III - Page 3
§§ 4305S.5 - 4306S.3
13.12.31
Interest income on past due loan arising b. For loans or receivables payable on
from discount amortization (and not from installment, the outstanding balance of the
the contractual interest of the account) shall loan if a payment has fallen due and
be accrued as provided in PAS 39. remained unpaid;
(As amended by Circular No. 494 dated 20 September 2005) c. In case of restructured loans as
defined in Sec. 4308S, the total outstanding
§ 4305S.6 Method of computing balance of the loan if a payment has fallen
interest. NSSLAs shall only charge interest due and remained unpaid; and
based on the outstanding balance of a loan d. All items in litigation as defined in
at the beginning of an interest period. the Manual of Accounts.
For a loan where the principal is payable Past due accounts as defined herein are
in installments, interest per installment considered non-performing loans (NPL).
period shall be calculated based on the (As amended by Circular No. 789 dated 28 February 2013)
outstanding balance of the loan at the
beginning of each installment period. § 4306S.2 Extension/renewal of loans
Towards this end, all loan-related (Transferrred to Section 4309S pursuant to Circular No. 789
documents shall show repayment schedules dated 28 February 2013)
in a manner consistent with this provision.
Marketing materials and presentations shall §4306S.3 Write-off of loans as bad
likewise be consistent with this provision. debts. To maximize the protection of
(Circular No. 754 dated 17 April 2012) members of NSSLAs against misfeasance
and malfeasance of the trustees and officers
Sec. 4306S Past Due Accounts. Past due thereof, the Monetary Board adopted the
accounts of an NSSLA shall, as a general following regulations on writing-off of
rule, refer to all accounts which are not paid loans by NSSLAs.
at maturity. a. The term loan shall include all types
of credit accommodations granted to, and
§ 4306S.1 Accounts considered past advances made by the NSSLA for the
due. The following shall be considered as account of the borrowers/debtors,
past due: including the interest thereon recorded in
a. For loan or receivable payable on the books.
demand not paid upon written demand as b. Writing-off of loans by an NSSLA
required herein or within one (1) year from shall be made not more than twice a year
date of grant or renewal, whichever comes by its board of trustees; and
earlier. c. Notice/application for write-off of
NSSLAs shall, in case of non-payment loans shall be submitted, in the prescribed
of a demand loan, make a written demand form to the appropriate department of the
within six (6) months following the grant SES at least thirty (30) days prior to the
of such loan. The demand shall indicate a intended date of write-off: Provided, That
period of payment which shall not be later no such loans with an aggregate outstanding
than six (6) months from date of said amount of P15,000 or more, as certified in
said notice/application, shall be written-off
demand.
without the prior approval of:

Part III - Page 4
§§ 4306S.3 - 4307S.1
12.12.31
(1) The Monetary Board, in case of subsequent to the making of such sale
loans to trustees and officers of the or contract;
NSSLA, direct or indirect; or (3) Any option, demand, lien, pledge,
(2) The head of the appropriate or other claim against, or for delivery of,
department of the SES, subject to property or money;
confirmation by the Monetary Board, in case (4) Any purchase, or other acquisition
of loans other than those mentioned in Item of, or any credit upon the security of any
“(1)” above. obligation or claim arising out of any of
the foregoing; and
§ 4306S.4 Updating of information (5) Any transaction or series of
provided to credit information bureaus transactions having a similar purpose or
NSSLAs which have provided adverse effect.
information, such as the past due or b. Tra n s a c t i o n s n o t c o v e r e d
litigation status of loan accounts, to credit Considering that the specific purpose of
information bureaus, or any organization the law is the full disclosure of the true
performing similar functions, shall submit cost of credit, the following categories
monthly reports to these bureaus or of credit transactions are outside the
organizations on the full payment or scope of the above regulations:
settlement of the previously reported (1) Credit transactions which do not
accounts within five (5) business days from involve the payment of any finance charge
the end of the month when such full by the debtor; and
payment was received. For this purpose, it (2) Credit transactions in which the
shall be the responsibility of the reporting debtor is the one specifying a definite and
NSSLAs to ensure that their disclosure of any fixed set of credit terms such as bank
information about their borrowers/clients is deposits, insurance contracts, sale of
with the consent of borrowers concerned. bonds, etc.
(Circular No. 589 dated 18 December 2007)
§ 4307S.1 Definition of terms
Sec. 4307S “Truth in Lending Act” a. Creditor (who shall furnish the
Disclosure Requirements. NSSLAs are information) means any person engaged in
required to strictly adhere to the the business of extending credit (including
provisions of R. A. No. 3765, otherwise any person who as a regular business
known as the “Truth in Lending Act,” practice makes loans or sells or rents
and shall make the true and effective property or services on a time, credit, or
cost of borrowing an integral part of
installment basis, either as principal or as
every loan contract.
agent), who requires as an incident to the
a. Transactions covered
extension of credit, the payment of a finance
(1) Any loan, mortgage, deed of trust,
charge.
advance and discount;
The term creditor shall include, but shall
(2) Any conditional sales contract,
not be limited to, banks and banking
any contract to sell, or sale or contract
institutions, insurance and bonding
of sale of property or services, either for
companies, savings and loan associations,
present or future delivery, under which,
credit unions, financing companies,
part or all of the price is payable
installment houses, real estate dealers,

Part III - Page 5
§§ 4307S.1 - 4307S.2
12.12.31
lending investors, pawnshops, and any other g. Amount to be financed consists of the
person or entity engaged in the business of cash price plus non-finance charges less the
extending credit who requires as an incident amount of the down payment and value of
to the extension of credit, the payment of a the trade-in.
finance charge. h. Finance charge includes interest, fees,
b. Person means any individual, service charges, discounts, and such other
corporation, partnership, NSSLA, or other charges incident to the extension of credit.
organized group of persons, or the legal i. Simple annual rate is the uniform
successor or representative of the foregoing, percentage which represents the ratio
and includes the Philippine Government or between the finance charge and the amount
any agency thereof, or any other to be financed under the assumption that
government, or any of its political the loan is payable in one (1) year with single
subdivisions, or any agency of the foregoing. payment upon maturity and there are no up-
c. Cash price or delivered price (in case front deductions to principal.
of trade transactions) is the amount of For loans with terms different from the
money which would constitute full payment above assumptions, the effective annual
upon delivery of the property (except money) interest rate shall be calculated and
or service purchased at the creditor’s place disclosed to the borrower as the relevant
of business. In the case of financial true cost of the loan comparable to the
transactions, cash price represents the concept of simple annual rate.
amount of money received by the debtor For loans with contractual interest rates
upon consummation of the credit stated on monthly basis, the effective interest
transaction, net of finance charges collected rate may be expressed as a monthly rate.
at the time the credit is extended (if any). In accordance with the Philippine
d. Down payment represents the Accounting Standards (PAS) definition,
amount paid by the debtor at the time of the effective interest rate is the rate that exactly
transaction in partial payment for the discounts estimated future cash flows
through the life of the loan to the net amount
property or service purchased.
of loan proceeds. For consistency,
e. Trade-in represents the value of an
methodology and standards for discounted
asset, agreed upon by the creditor and
cash flow models shall be prescribed to be
debtor, given at the time of the transaction
used for the purpose.
in partial payment for the property or service
(As amended by Circular No. 754 dated April 2012)
purchased.
f. Non-finance charges correspond to § 4307S.2 Information to be disclosed
the amounts advanced by the creditor for The following are the minimum information
items normally associated with the ownership required to be disclosed to NSSLA
of the property or of the availment of the service borrowers (sample form in Appendix S-4):
purchased which are not incident to the a. The total amount to be financed;
extension of credit. For example, in the case b. The finance charges expressed in
of the purchase of an automobile on credit, terms of pesos and centavos;
the creditor may advance the insurance c. The net proceeds of the loan; and
premium as well as the registration fee for d. The percentage that the finance
the account of the debtor. charge bears to the total amount to be

Part III - Page 6
§§ 4307S.2 - 4308S
13.12.31
financed expressed as a simple annual rate a. First offense. Reprimand on the erring
or an effective annual interest rate as officer/s;
described in Item “h” of Subsec. 4307S.1. b. Second offense. Reprimand on the
Effective annual interest rate may also be entire board of trustees; and
quoted as a monthly rate in parallel with c. Subsequent offense/s:
the quotation of the contractual rate. i. Suspension of the erring officer/s and/
NSSLAs are required to furnish each or entire board of trustees; and
borrower a copy of the disclosure statement, ii. Restriction on lending activities.
prior to the consummation of the transaction. This is without prejudice to other
(As amended by Circular No. 754 dated 17 April 2012 and penalties and sanctions provided under
M-2012-018 dated 19 April 2012) Sections 36 and 37 of R.A. No. 7653.
(As amended by Circular No. 754 dated 17 April 2012)
§ 4307S.3 Inspection of contracts
covering credit transactions. NSSLAs shall Sec. 4308S Restructured Loans; General
keep in their office or place of business Policy. Restructured loans are loans the
copies of contracts covering all credit principal terms and conditions of which
transactions entered into by them which have been modified for it not to become a
involve the extension of credit to another problem account, or if already past due, to
and the payment of finance charges therefor. allow for a better settlement plan to fully
Such copies shall be available for inspection pay-off the loan. Restructured loans are
or examination by the appropriate supported by a restructuring agreement
department of the SES. setting forth a new plan of payment or a
schedule of payment on a periodic basis.
§ 4307S.4 (2008 – 4309S.4) Posters The modification may include, but is not
NSSLAs shall post in conspicuous places limited to, change in maturity, installment
in their principal place of business and amortization, interest rate, collateral or
branches, the information as contained in increase in the face amount of the debt
the revised format of disclosure statement resulting from the capitalization of accrued
(Appendix S-4). The posters shall include interest/accumulated charges.
an explicit notification that the disclosure Items in litigation and loans subject of
statement is a required attachment to the judicially-approved compromise, as well
loan contract and the customer has a right as those covered by petitions for
to demand a copy of such disclosure. suspensions or for new plans of payment
(As amended by Circular No. 754 dated17 April 2012) approved by the court or the SEC, shall not
be classified as restructured loans.
§4307S.5 Sanctions and penal NSSLAs shall have the flexibility to
provisions. Non-compliance with any of the determine the basis for and terms of the loan
provisions of this Section shall be restructuring, considering, among other
regarded at least as a less serious offense, things, the paying capacity of the
depending on the severity of non- borrowers: Provided, That these shall at all
disclosure, number of loans and amount times be consistent with sound credit risk
involved in the violation. In addition to management standards.
sanctions under R.A. No. 3765, the Loan restructuring shall be subject to the
following sanctions may be imposed: approval of the board of trustees whose

Part III - Page 7
§§ 4308S - 4310S
13.12.31
resolution shall embody, among other or the NSSLA by-laws, as applicable:

things: Provided, That at least thirty percent (30%)
1. basis of or justification for the of the loan shall have been paid.
approval; (As amended by Circular No. 789 dated 28 February 2013)
2. basis for the determination of the
borrower’s capacity to pay; and Sec. 4310S Minimum Required Disclosure
3. nature and extent of protection of the NSSLAs shall provide a table of the
exposure. applicable fees, penalties and interest rates
The restructuring of loans granted to on loan transactions, including the period
trustees and/or officers of an NSSLA should covered by and the manner of and reason
be upon terms not less favorable to the for the imposition of such penalties, fees
Association than those offered to other and interests; fees and applicable conversion
members. reference rates for third currency
In case of loans secured by real estate transactions, in plain sight and language,
collateral, such security shall be appraised on materials for marketing loans, such as
at the time of restructuring to ensure that brochures, flyers, primers and advertising
current market values are being used. materials, on loan application forms, and
A second restructuring of a loan may be on billing statements: Provided, That these
allowed only if there are reasonable disclosures are in addition to the full
justifications, and after the borrower has disclosure of the fees, charges and interest
paid at least twenty percent (20%) of the
rates in the terms and conditions of the loan
principal obligation and updated the
agreement found elsewhere on the
payment of all interest accruing to the loan
application form and billing statement:
as first restructured.
Provided further, That such table of fees,
Restructured loans shall be classified
penalties and interest rates shall be printed
and provided with adequate allowance for
in plain language and in bold black letters
probable losses in accordance with
against a light or white background, and
Appendix S-9.
(Circular No. 789 dated 28 February 2013) using the minimum Arial 12 theme font and
size, or its equivalent in readability, and on
Sec. 4309S (2012-4306S.2) Renewal of the first page, if the applicable document
Loans. Loans payable in periodic has more than one (1) page.
installments may be renewed for the full or Transitory provision: NSSLAs covered
beyond the amount of such loans but within in 4312N.12 - shall be given a period of
the limit prescribed under Subsec. 4301S.1b 120 days from 6 January 2011 to fully

Part III - Page 8
§§ 4310S - 4312S
10.12.31
implement the required disclosure has given express permission or said times
requirements. are the only reasonable or convenient
(Circular No. 702 dated 15 December 2010) opportunities for contact.
NSSLAs shall inform their borrower in
Sec. 4311S Unfair Collection Practices writing of the endorsement of the collection
NSSLAs, collection agencies, counsels and of their account to a collection agency/agent,
other agents may resort to all reasonable and or the endorsement of their account from
legally permissible means to collect one collection agency/agent to another, at
amounts due them under the loan least seven (7) days prior to the actual
agreement: Provided, That in the exercise endorsement. The notification shall include
of their rights and performance of duties, the full name of the collection agency and
they must observe good faith and reasonable its contact details: Provided, That the
conduct and refrain from engaging in required notification in writing shall be
unscrupulous or untoward acts. Without included in the terms and conditions of the
limiting the general application of the loan agreement. NSSLAs shall adopt policies
foregoing, the following conduct is a and procedures to ensure that personnel
violation of this Section: handling the collection of accounts, whether
a. the use or threat of violence or other these are in-house collectors, or third-party
criminal means to harm the physical person, collection agents, shall disclose his/her full
reputation, or property of any person; name/true identity to the borrower.
b. the use of obscenities, insults, or (Circular No. 702 dated 15 December 2010)
profane language which amount to a criminal
act or offense under applicable laws; Sec. 4312S Confidentiality of Information
c. disclosure of the names of borrowers NSSLAs shall keep strictly confidential the
who allegedly refuse to pay debts, except data on the borrower or consumer, except
as allowed under Subsec. 4312S; under the following circumstances:
d. threat to take any action that cannot a. disclosure of information is with the
legally be taken; consent of the borrower or consumer;
e. communicating or threat to b. release, submission or exchange of
communicate to any person credit customer information with other financial
information which is known to be false, institutions, credit information bureaus,
application form and billing statement: lenders, their subsidiaries and affiliates;
Provided further, That such table of fees, c. upon orders of court of competent
penalties and interest rates shall be printed jurisdiction or any government office or
including failure to communicate that a debt agency authorized by law, or under such
is being disputed; conditions as may be prescribed by the
f. any false representation or deceptive Monetary Board;
means to collect or attempt to collect any d. disclosure to collection agencies,
debt or to obtain information concerning counsels and other agents of the NSSLA to
borrower; and enforce its rights against the borrower;
g. making contact at unreasonable/ e. disclosure to third party service
inconvenient times or hours which shall be providers solely for the purpose of
defined as contact before 6:00 A.M. or after assisting or rendering services to the
10:00 P.M., unless the account is past due NSSLA in the administration of its lending
for more than sixty (60) days or the borrower business; and

Part III - Page 9
§§ 4312S-4356S
14.12.31
f. disclosure to third parties such as or securities which are non-speculative in

insurance companies, solely for the purpose nature;
of insuring the NSSLA from borrower default g. Land transfer certificates issued by the
or other credit loss, and the borrower from government to tenant farmers, under the
fraud or unauthorized charges. agrarian reform program to the extent of sixty
(Circular No. 702 dated 15 December 2010) percent (60%) of the value of the farm
holdings: Provided, That a certification shall
Sec. 4313S Sanctions. Violations of the be first secured from the office of the Registry
provisions of Secs. 4310S to 4312S shall be of Deeds to the effect that the Land Transfer
subject to any or all of the following Certificate being presented is valid; and
sanctions depending upon their severity: h. Other securities as may be approved
a. First offense. Reprimand for the by the Monetary Board.
directors/officers responsible for the
violation; Secs. 4322S - 4335S (Reserved)
b. Second offense. Disqualification of the
NSSLA concerned from the credit facilities of C. - D. (RESERVED)
the Bangko Sentral except as may be allowed
under Section 84 of R. A. No. 7653; Sec. 4336S (Reserved)
c. Subsequent offense/s:
Sec. 4337S Salary Loans. The Bangko Sentral
i. Prohibition on the NSSLA concerned shall promote the sustainable development of
from the extension of additional credit consumer lending such as salary loans under
accommodation against personal security; conditions of fair and sound credit practices.
and (Circular No. 837 dated 18 June 2014)
ii. Penalties and sanctions provided
under Sections 36 and 37 of R. A. No. 7653. § 4337S.1 Definition of terms
(Circular No. 702 dated 15 December 2010) a. Salary Loans. Unsecured loans,
granted to individuals on the basis of regular
Secs. 4314S – 4320S (Reserved) salary, pension or other fixed compensation,
where repayment would come from such
B. SECURED LOANS future remunerations, either through salary
deduction, debit from the borrower’s
Sec. 4321S Kinds of Security. Loans by an deposit account, over-the-counter payment
NSSLA may be secured by any or all of the or other type of payment arrangement agreed
following: upon by the borrower and lender.
a. Mortgages on registered real estate; (Circular No. 837 dated 18 June 2014)
b. Chattel mortgages on harvested or
stored crops of non-perishable character; Secs. 4338S - 4355S (Reserved)
c. Chattel mortgages on livestock, tools,
equipment or machinery, supplies or E. LOANS/CREDIT
materials, merchandise and other personal ACCOMMODATIONS TO TRUSTEES,
properties; OFFICERS, STOCKHOLDERS AND
d. Assignment of quedans which gives the THEIR RELATED INTERESTS
right of disposal of readily marketable products;
e. Time and/or savings deposits and/ or Sec. 4356S General Policy. The transactions
capital contribution; of all trustees or officers with the NSSLA
f. Pledge of bonds, stock and other shall not be under terms more favorable than
securities of GOCCs and other bonds, stocks those transacted with other members.

Part III - Page 10
§§ 4357S - 4391S.3
08.12.31
Sec. 4357S Direct/Indirect Borrowings; total assets; any investment in excess of ten
Ceilings. No NSSLA shall directly or percent (10%) shall require the prior approval
indirectly make any loan to any trustee or of the Bangko Sentral: Provided, That NSSLAs
officer of such NSSLA, either for himself or may invest available funds in excess of ten
as agent or as partner of another, except percent (10%) of total assets in sound non-
with the written approval of the majority of speculative enterprise, particularly in readily
the trustees of the NSSLA, excluding the marketable and high grade commercial papers,
trustee concerned: Provided, That the bonds and securities issued by the
aggregate loans to such trustees and officers Government of the Philippines or any of its
shall not exceed twenty percent (20%) of political subsidiaries, instrumentalities or
the total capital contributions of the NSSLA. corporations including GOCCs, subject to the
following conditions:
Sec. 4358S Records; Reports. In all cases (1) The credit needs of the members
of accommodations granted to trustees and shall be served/satisfied first;
officers under Sec. 4357S, the written
(2) The investment in any one (1)
approval of the majority of the trustees of
corporation (excluding the Government of
the NSSLA, excluding the trustee concerned,
the Philippines, any of its political
shall be entered upon the records of the
subdivisions, instrumentalities, or
NSSLA and a copy of such entry shall be
corporations including GOCCs), shall not
transmitted forthwith to the appropriate
exceed twenty-five percent (25%) of the
department of the SES within twenty (20)
NSSLA's combined capital accounts; and
business days from the date of approval.
(3) The additional investment may be
Secs. 4359S - 4369S (Reserved) up to another ten percent (10%) of the
NSSLA’s total assets;
Sec. 4370S Sanctions. The office of any b. In real property, in an aggregate amount
trustee or officer of an NSSLA who violates not exceeding at any one time five percent (5%)
the provisions of these rules on of the total assets of such NSSLA; and
accommodations granted to trustee and c. In furniture, fixtures, furnishings and
officers shall immediately become vacant and equipment, and leasehold improvements for
said trustees or officer shall be punished by its offices, in amount not exceeding at any
imprisonment of not more than one (1) year one time ten percent (10%), of its total
nor more than ten (10) years and by a fine of capital contribution.
not less than P5,000 nor more than P50,000
pursuant to Section 15 of R.A. No. 8367. §§ 4391S.1 - 4391S.2 (Reserved)
F. - I. (RESERVED) § 4391S.3 Investments in debt and

marketable equity securities. The
Secs. 4371S - 4390S (Reserved) classification, accounting procedures,
valuation, sales and transfers of investments
J. OTHER OPERATIONS in debt securities and marketable equity
securities shall be in accordance with the
Sec. 4391S Fund Investments. An NSSLA guidelines in Appendices Q-20 and Q-20a.
may invest its funds in any or all of the Penalties and sanctions. The following
following: penalties and sanctions shall be imposed
a. In bonds and securities in an aggregate on FIs and concerned officers found to
amount not exceeding ten percent(10%) of its violate the provisions of these regulations:

Part III - Page 11
§§ 4391S.3-4399S
13.12.31
a. Fines of P2,000/banking day to be include, at least, an independent and

imposed on NSSLAs for each violation, periodic review of quality of risk assets.
reckoned from the date the violation was b. Controls in place, and policies and
committed up to the date it was corrected; procedures to determine the adequacy of
and booked allowance for probable losses on
b. Sanctions to be imposed on loans and other risk assets, consistent with
concerned officers: the Philippine Accounting Standards and
(1) First offense – reprimand the officers the minimum standards required in
responsible for the violation; and Appendix S-9. The allowance for losses
(2) Subsequent offenses–suspension- of required in the said appendix shall likewise
ninety (90) days without pay for officers be set-up immediately; and
responsible for the violation. c. A robust process to ensure that the
(Circular No. 476 dated 16 February 2005 as amended by Circular board of trustees is informed of the results
Nos. 628 dated 31 October 2008 and 626 dated 23 October of independent and periodic reviews, and
2008)
determination of adequacy of booked loss
reserves, and that appropriate actions on
§§ 4391S.4 - 4391S.10 (Reserved)
such reports are undertaken consistent with
the specific duties and responsibilities of the
Sec. 4392S Loan Portfolio and Other Risk
board of trustees as provided under Subsec.
Assets Review System. To ensure that timely
4141S.5.a(7).
and adequate management action is taken
to maintain the quality of the loan portfolio
and other risk assets, and that adequate loss
reserves are set-up and maintained at a level Secs. 4393S - 4395S (Reserved)
sufficient to absorb the loss inherent in the
loan accounts and other risk assets, each K. MISCELLANEOUS PROVISIONS
NSSLA shall establish a system of identifying
and monitoring existing or potential problem Secs. 4396S - 4398S (Reserved)
loans and other risk assets, and of evaluating
credit and asset management policies vis-a- Sec. 4399S General Provision on Sanctions
vis prevailing circumstances and emerging Unless otherwise provided, any violation
portfolio trends. of the provisions of this Part shall be subject
The board of trustees is responsible for to the sanctions provided in Sections 34,
ensuring that the NSSLA has, at a minimum: 35, 36 and 37 of R.A. No. 7653, whenever
a. A robust risk management that shall applicable.

Part III - Page 12
§§4401S - 4401S.2
14.12.31
PART FOUR
BSP REGULATIONS ON FINANCIAL CONSUMER PROTECTION
A. CONSUMER PROTECTION BSFI. The Board may also delegate other

duties and responsibilities to senior
OVERSIGHT FUNCTION
management and/or Committees created for
the purpose but not the function of
Section 4401S Consumer Protection
overseeing compliance with the
Oversight Function. The Board of Directors
BSP-prescribed Consumer Protection
(Board) of BSFIs is ultimately responsible in
Framework and the BSFI’s own Consumer
ensuring that consumer protection practices Protection Framework.
are embedded in the BSFI’s business (Circular No. 857 dated 21 November 2014)
operations. BSFIs must adhere to the highest
service standards and embrace a culture of §4401S.2 Consumer Protection Risk
fair and responsible dealings in the conduct Management System (CPRMS)
of their business through the adoption of a All BSFIs, regardless of size, should have a
BSFI’s Financial Consumer Protection CPRMS that is part of the corporate-wide
Framework that is appropriate to the BSFI’s Risk Management System. The CPRMS is a
corporate structure, operations, and risk means by which a BSFI identifies, measures,
profile. The BSFI’s Financial Consumer monitors, and controls consumer protection
Protection Framework shall be embodied in risks inherent in its operations. These
its Board-approved Financial Consumer include both risks to the financial consumer
Protection Manual. and the BSFI. The CPRMS should be directly
(Circular No. 857 dated 21 November 2014) proportionate to the BSFI’s asset size,
structure, and complexity of operation. A
§4401S.1 Role and responsibility of the carefully devised, implemented, and
board and senior management. The monitored CPRMS provides the foundation
board and senior management are for ensuring an BSFI’s adherence to
responsible for developing the BSFI’s consumer protection standards of conduct
consumer protection strategy and and compliance with consumer protection
establishing an effective oversight over the laws, rules and regulations, thus ensuring
BSFI’s consumer protection programs. The that the BSFI’s consumer protection practices
Board shall be primarily responsible for address and prevent identified risks to the
approving and overseeing the BSFI and associated risk of financial harm
implementation of the BSFI’s consumer or loss to consumers.
protection policies as well as the a. Board and senior management
mechanism to ensure compliance with said oversight. The Board is responsible for
policies. While senior management is developing and maintaining a sound CPRMS
responsible for the implementation of the that is integrated into the overall framework
consumer protection policies approved by for the entire product and service life-cycle.
the Board, the latter shall be responsible for The Board and Senior Management should
monitoring and overseeing the performance periodically review the effectiveness of the
of senior management in managing the day CPRMS, including how findings are reported
to day consumer protection activities of the and whether the audit mechanisms in place

Part IV - Page 1
§ 4401S.2
14.12.31
enable adequate oversight. The quality and BSFI’s business operations; 3) address
timeliness of the information provided to the compliance with consumer protection laws,
Board and Senior Management regarding rules, and regulations; and 4) reviewed
the BSFI’s CPRMS are especially important periodically and kept-to-date as it serve as
for assessing the program’s effectiveness. reference for employees in their day-to-day
The Board and Senior Management must activities.
also ensure that sufficient resources have d. Internal audit function
been devoted to the program. The ability to Independent of the compliance function, the
achieve the consumer protection objectives BSFI’s Audit Function should review its
depends, in large part, on the authority and consumer protection practices, adherence
independence of the individuals directly to internal policies and procedures, and
responsible for implementing the CPRMS compliance with existing laws, rules and
and for performing audit/review activities, regulations. The BSFI’s internal audit of the
and the support provided by the Board and different business units/functions should
Senior Management. The Board and Senior include the consumer protection audit
Management must also make certain that program. A well-designed and implemented
CPRMS weaknesses are addressed and consumer protection audit program ensures
corrective actions are taken in a timely that the Board or its designated Committee
manner. shall be able to make an assessment on the
b. Compliance program. A Consumer effectiveness of implementation as well as
Protection Compliance Program is an essential adequacy of approved policies and
component of the CPRMS. The BSFIs should standards in meeting the established
establish a formal, written Consumer consumer protection objectives.
Protection Compliance Program that is part of e. Training. Continuing education of
the over-all Compliance System and should personnel about consumer protection laws,
be in accordance with the Revised Compliance rules and regulations as well as related bank
Framework for Banks under Sec. 4180Q. policies and procedures is essential to
A well planned, implemented, and maintained maintaining a sound consumer protection
Consumer Protection Compliance Program compliance program. BSFIs should ensure
should prevent or reduce regulatory violations that all relevant personnel, specifically those
and protect consumers from non-compliance whose roles and responsibilities have
and associated harms or loss. customer interface, receive specific and
c. Policies and procedures. An comprehensive training that reinforces and
effective CPRMS should have consumer helps implement written policies and
protection policies and procedures in place, procedures on consumer protection. The
approved by the Board. A comprehensive BSFI should institute a consumer protection
and fully implemented policies help to training program that is appropriate to its
communicate the board’s and senior organization structure and the activities it
management’s commitment to compliance engages. The training program should be
as well as expectations. Overall, policies able to address changes in consumer
and procedures should a) be consistent with protection laws, rules and regulations and
Consumer Protection policies approved by to policies and procedures and should be
the Board; b) ensure that consumer provided in a timely manner.
protection practices are embedded in the (Circular No. 857 dated 21 November 2014)

Part IV - Page 2
§§4402S - 4402S.1
14.12.31
B. CONSUMER PROTECTION accordance with the requirements set out

STANDARDS OF CONDUCT FOR BSFIS in the regulations.
(2) Readily and consistently makes
Sec. 4402S Consumer Protection available to the customer a written copy of
Standards. The following consumer the terms and conditions (T&C) that apply
protection standards reflect the core to a product or service. The contents of the
principles, which BSFIs are expected to T&C must be fully disclosed and explained
observe at all times in their dealings with to financial customers before initiating a
financial consumers. These should be transaction. Where and when warranted,
embedded into the corporate culture of the reference to the T&C should be made while
BSFI, enhancing further its defined transacting with the consumer and before
governance framework while addressing consummating the transaction, if such
conflicts that are inimical to the interests of reference is material to the understanding
the financial consumer. of the consumer of the nature of the product
(Circular No. 857 dated 21 November 2014)
or service, as well as its benefits and risks.
As a written document, the T&C must
§4402S.1 Disclosure and transparency
be complete but concise, easily
BSFIs must take affirmative action to ensure
understandable, accurate, and presented in
that their consumers have a reasonable
a manner that facilitates the consumer’s
holistic understanding of the products and
comprehension. The latter is taken to mean
services, which they may be acquiring or
that the text of the document should be
availing. In this context, full disclosure and
according to Subsec. 4320Q.4 (Amended
utmost transparency are the critical elements
Regulations to Enhance Consumer
that empower the consumer to make
Protection in the Credit Card Operations of
informed financial decisions. This is made
Banks and Their Subsidiary or Affiliate
possible by providing the consumer with
Credit Card Companies).
ready access to information that accurately
The T&C should include at least the
represents the nature and structure of the
following:
product or service, its terms and conditions,
(a) The full price or cost to the customer
as well as its fundamental benefits and risks.
including all interest, fees, charges, and
The BSFI demonstrates the competencies
penalties. The T&C must clearly state
required of this principle if it complies with
whether interest, fees, charges, and
the following:
penalties can change over time. The method
a. Key information
for computing said interest, fees, charges,
(1) Ensures that offering documents of
and penalties shall be presented in
products and services contain the
accordance with Subsec. 4305S.6;
information necessary for customers to be
(b) General information about the
able to make an informed judgment of the
operation of the products or services
product or service and, in particular, meet
including the customer’s obligations and
the full disclosure requirements specified
liabilities;
under existing laws or regulations. All key
(c) Cooling-off period, if applicable;
features and risks of the products should be
(d) Cancellation, return and exchange
highlighted prominently in a succinct
policies, and any related cost;
manner. Where a product is being offered
(e) The actions and remedies which the
on a continuous basis, its offering
BSFI may take in the event of a default by
documents should be updated in
the customer;

Part IV - Page 3
§ 4402S.1
14.12.31
(f) Procedures to report unauthorized understandable, comprehensive, and

transactions and other contingencies, as well transparent manner, for the duration of the
as the liabilities of parties in such case; and contract. Such information covers the
(g) A summary of the BSFI’s complaints characteristics and the risks of the
handling procedure. products sold by the BSFI and their
(3) Advises customers to read and authorized agents.
understand the applicable T&C, when (10) Imparts targeted information to the
considering a product or service. specific groups of clients to whom specific
(4) Ensures that its staff communicates products are being marketed, with a
in such a manner that clients can understand particular consideration for vulnerable
the terms of the contract, their rights and customers. Communication channels
obligations. Staff should communicate with employed for such targeted marketing
techniques that address literacy limitations initiatives may be accordingly calibrated.
(e.g., materials are available in local language). (11) Offers enhanced disclosure for
(5) Provides customers adequate time to more complex products, highlighting the
review the T&C of the product or service, costs and risks involved for the customer.
asks questions and receives additional For structured investment products, a
information prior to signing contracts or Product Highlight Sheet (PHS) is required.
executing the transaction. The staff of the The PHS should be clear, concise, and
BSFI should be available to answer the easily understandable by individual
questions and clarifications from the customers. It should contain information
financial customer. that empowers the customer to appreciate
(6) Ensures that staff assigned to deal the key features of the product and its risks.
directly with customers, or who prepare It is prepared in a format that facilitates
advertisement materials (or other material comparison with other products. The PHS
of the BSFI for external distribution) or who should be available at no cost to the public
markets any product or service should be and made available to consumers upon
fully knowledgeable about these products request. Before signing any contract, the
and services, including statutory and BSFI should ensure that the customer has
regulatory requirements, and are able to freely signed a statement to the effect that
explain the nuances to the consumer. the customer has duly received, read, and
(7) Uses a variety of communication understood the PHS.
channels to disclose clear and accurate (12) Notifies the customer in writing of
information. Such communication channels any change in:
should be available to the public without (a) Interest rate to be paid or charged
need for special access requirements, which on any account of the customer as soon as
may entail additional expense. possible; and
Communication channels should be (b) A non-interest charge on any account
sufficiently responsive to address the literacy of the customer within a number of days as
limitations of the financial consumer. Said provided under existing regulations prior to
channels may be written and/or verbal as the effective date of the change.
may be warranted. If the revised terms are not acceptable
(8) Discloses pricing information in to the customer, he or she should have the
public domains (e.g., websites). right to exit the contract without penalty,
(9) Updates customers with relevant provided such right is exercised within a
information, free of charge in a clear, reasonable period. The customer should

Part IV - Page 4
§§4402S.1 - 4402S.2
14.12.31
be informed of this right whenever a notice marketed and the communication channels
of change is made. employed for marketing financial services.
(13) Provides customers with a proof of (4) Ensures that all advertising and
the transaction immediately after the promotional materials disclose the fact that
transaction has been completed. The it is a regulated entity and that the name and
customer should be given a hard copy of contact details of the regulator are indicated.
each of the documents signed by the clients c. Conflict of interest
(including, but not limited to, the contract) (1) Discloses properly to the consumer
with all terms and conditions. The BSFI prior to the execution of the transaction that
ensures that documents signed by the the BSFI or its staff has an interest in a direct/
customer are completely filled and that there cross transaction with a consumer.
are no blank terms. (2) Discloses the limited availability of
(14) Regularly provides customers with products to consumers when the BSFI only
clear and accurate information regarding recommends products which are issued by
their accounts (e.g., Statement of accounts their related companies, particularly when
that includes, among others, covering commissions or rebates are the primary
period, opening balance/value of basis for recommending the particular
transactions, all kinds of interest, fees and product to consumers.
charges, closing balance, inquiries for (3) Discloses the basis on which the
outstanding balances, proof of payments for BSFI is remunerated at the pre-contractual
loans). stage.
(15) Informs customers of their rights (4) Ensures that adequate systems and
and responsibilities including their right to controls are in place to promptly identify
complain and the manner of its submission. issues and matters that may be detrimental
b. Advertising and promotional to a customer’s interest (e.g., cases in which
materials advice may have been given merely to meet
(1) Ensures that advertising and sales targets, or may be driven by financial
marketing materials do not make false, or other incentives).
misleading, or deceptive statements that (Circular No. 857 dated 21 November 2014)
may materially and/or adversely affect the
decision of the customer to avail of a service §4402S.2 Protection of client
or acquire a product. information. Financial consumers have the
(2) Ensures that advertising and right to expect that their financial
promotional materials are easily readable transactions, as well as relevant personal
and understandable by the general public. information disclosed in the course of a
It should disclose clear, accurate, updated, transaction, are kept confidential. Towards
and relevant information about the product this end, BSFIs must ensure that they have
or service. It should be balanced/ well-articulated information security
proportional (reflecting both advantages and guidelines, well-defined protocols, a
risks of the product or service); visible/ secured database, and periodically
audible; key information is prominent and re-validated procedures in handling the
not obscured; print is of sufficient size and personal information of their financial
consumers. This should be an end-to-end
clearly legible.
process that should cover, among others,
(3) Ensures that promotional materials
the array of information that will be
are targeted according to the specific groups
pre-identified and collected, the purpose of
of consumers to whom products are
gathering each information, how these will be

Part IV - Page 5
§ 4402S.2
14.12.31
sourced from the client, the IT-security (d) Select service providers that can
infrastructure of the BSFI, and the protocols maintain appropriate safeguards.
for disclosure, both within the BSFI and (e) Evaluate and adjust the program in
especially to third parties. light of relevant circumstances, including
The BSFI demonstrates the ability to changes in the firm’s business or operations,
protect client information if it is able to: or the results of security testing and
a. Confidentiality and security of client monitoring.
information (4) Have appropriate policies and
(1) Have a written privacy policy to practices for employee management and
safeguard its customers’ personal training to assess and address the risks to
information. This policy should govern the customer information. These include:
gathering, processing, use, distribution, (a) Checking references and doing
storage, and eventual disposal of client background checks before hiring employees
information. The BSFI should ensure that who will have access to customer
privacy policies and sanctions for violations information.
are implemented and strictly enforced. (b) Asking new employees to sign an
(2) Ensure that privacy policies are agreement to follow BSFI confidentiality and
regularly communicated throughout the security standards for handling customer
organization. Opportunities include information.
employees’ initial training sessions, regular (c) Limiting access to customer
organization-wide training programs, information to employees who have a
employee handbooks, posters and posted business reason to see it.
signs, company intranet and internet (d) Controlling access to sensitive
websites, and brochures available to information by requiring employees to use
clients. “strong” passwords that must be changed
(3) Have appropriate systems in place on a regular basis.
to protect the confidentiality and security of (e) Using automatic time-out or log-off
the personal data of its customers against controls to lock employee computers after
any threat or hazard to the security or a period of inactivity.
integrity of the information and against (f) Training employees to take basic
unauthorized access. This includes a steps to maintain the security,
written information security plan that confidentiality, and integrity of customer
describes its program to protect customer information. These may include locking
personal information. The plan must be rooms and file cabinets where records are
appropriate to its size and complexity, nature kept; ensuring that employee passwords are
and scope of its activities, and the sensitivity not posted in work areas; encrypting
of customer information it handles. As part sensitive customer information when
of its plan, the BSFI must: transmitted electronically via public
(a) Designate employee accountable to networks; referring calls or other requests
coordinate its Information Security Program. for customer information to designated
(b) Identify and assess the risks to individuals who have been trained in how
customer information in each relevant area BSFI safeguards personal data; and reporting
of the BSFI operation, and evaluate the suspicious attempts to obtain customer
effectiveness of the current safeguards for information to designated personnel.
controlling these risks. (g) Regularly reminding all employees
(c) Design and implement a safeguards of company policy to keep customer
program, and regularly monitor and test it. information secured and confidential.

Part IV - Page 6
§§ 4402S.2 - 4402S.3
14.12.31
(h) Imposing strong disciplinary promotional partners, and other relevant

measures for security policy violations. external parties.
(i) Preventing terminated employees (3) Provide access to customers to the
from accessing customer information by information shared and should allow
immediately deactivating their passwords customers to challenge the accuracy and
and user names and taking other measures. completeness of the information and have
(5) Have a strong IT System in place to these amended as appropriate.
protect the confidentiality, security, (4) Appropriate penalties should be
accuracy, and integrity of customer’s imposed by the BSFI to erring employees
personal information. This includes for exposing or revealing client data to third
network and software design, and parties without prior written consent from
information processing, storage, client.
transmission, retrieval, and disposal. (Circular No. 857 dated 21 November 2014)
Maintaining security throughout the life-
cycle of customer information, from data §4402S.3 Fair treatment. Fair treatment
entry to disposal, includes: ensures that financial consumers are treated
(a) Knowing where sensitive customer fairly, honestly, professionally and are not
information is stored and storing it securely. sold inappropriate and harmful financial
Make sure only authorized employees have products and services. BSFIs should ensure
access. they have the necessary resources and
(b) Taking steps to ensure the secure procedures in place, internal monitoring,
transmission of customer information. and control mechanisms, for safeguarding
(c) Disposing customer information in the best interest of their customers. These
a secure way. include general rules, such as those
(d) Maintaining up-to-date and addressing ethical staff behavior, acceptable
appropriate programs and controls to selling practices as well as regulating
prevent unauthorized access. products and practices where customers are
(e) Using appropriate oversight or audit more likely to be offered services that are
procedures to detect the improper disclosure inappropriate for their circumstances.
or theft of customer information. The BSFI demonstrates the principle of
(f) Having a security breach response fair treatment towards financial consumers
plan in the event the BSFI experiences a data if it is able to:
breach. a. Affordability and suitability of
b. Sharing of customer information product or service
(1) Inform its customers in writing and (1) When making a recommendation to
explain clearly to customers as to how it a consumer:
will use and share the customer’s personal (a) Gather, file, and record sufficient
information. information from the customer to enable the
(2) Obtain the customers’ written BSFI to offer an appropriate product or
consent, unless in situations allowed as an service to the customer. The information
exception by law or BSP-issued regulations gathered should be commensurate to the
on confidentiality of customer’s information, nature and complexity of the product or
before sharing customers’ personal service either being proposed to or sought
information with third parties such as credit by the customer and should enable the BSFI
bureau, collection agencies, marketing and to provide an appropriate level of

Part IV - Page 7
§ 4402S.3
14.12.31
professional service. As a minimum, (8) Do not use high pressure/aggressive

information includes the customers’ sales techniques and do not force clients to
financial knowledge and experience, sign contracts.
financial capabilities, investment objectives, (9) Have a system in place for approval
time horizons, needs, priorities, risk when selling high-risk instruments to
affordability, and risk profile. consumers.
(b) Offer products or services that are b. Prevention of over-indebtedness
in line with the needs/risk profile of the (1) Have appropriate policies for good
consumer. The BSFI should provide for and repayment capacity analysis. The loan
allow the customer to choose from a range approval does not rely solely on guarantees
of available products and services that can (co-signers or collateral) as a substitute for
meet his needs and requirements. Sufficient good capacity analysis.
and right information on the product or (2) Properly assess the creditworthiness
service should enable the customer to select and conduct appropriate client repayment
the most suitable and affordable product or capacity analysis when offering a new credit
service. product or service significantly increasing
(2) Inform or warn the customers that the amount of debt assumed by the customer.
if they do not provide sufficient information (3) Ensure to have an appropriate
regarding their financial knowledge and system in place for credit analysis and
experience, the BSFI is not in a position to decisions including appropriate criteria to
accurately determine whether the product limit the amount of credit.
or service is appropriate to them, given the (4) Monitor enforcement of policies to
prevent over-indebtedness. The Board and
limited information available. This
Senior Management of the BSFIs should be
information or warning may be provided in
aware of and concerned about the risks of
a standardized format.
over-indebtedness of its customers.
(3) Ensure that the customer certifies in
(5) Draw the customer’s attention to
writing the accuracy of the personal the consequences of signing a contract that
information provided. may affect his financial position and his
(4) Ensure to offer market-based pricing. collateral in case of default in payment of a
(5) Design products that are appropriate loan/obligation.
to the varying needs and interests of different (6) Prepare and submit appropriate
types of consumers, particularly the more reports (e.g., loan quality, write-offs,
vulnerable consumers. Adequate product restructured loans) to management.
approval should be in place. Processes (7) Ensure that corrective measures are
should be proper to ensure that products and in place for poor long-term quality of loan
services are fit for the targeted consumer. portfolio linked to over-indebtedness.
(6) Do not engage in abusive or (8) Have specific procedures to actively
deceptive acts or practices. work out solutions (i.e., through workout
(7) Seek customer feedback for product plan) for restructured loans/refinancing/
design and delivery and use this feedback writing-off on exceptional basis for clients
to enhance product development and in default who have the “willingness” but
improve existing products. Likewise, without the capacity to repay, prior to
investigate reasons for client drop out. seizing the assets.

Part IV - Page 8
§ 4402S.3
14.12.31
c. Cooling-off period draw to the customer’s attention that the

(1) As may be appropriate, provide the product may not be suitable for him in view
customer with a “cooling-off” period of a of the risk mismatch. In such instances, there
reasonable number of days (at least two (2) should be a written disclosure of
banking days) immediately following the consequences which is accepted by the
signing of any agreement or contract, client.
particularly for financial products or services (4) Ensure that the customer’s
with a long-term savings component or suitability and affordability are assessed
those subject to high pressure sales against specific risks of the investment
contracts. products:
(2) Permit the customer to cancel or (a) Financial Needs Analysis (FNA) and
treat the agreement as null and void without Client Suitability - to assess the customer’s
penalty to the customer of any kind on his risk profile and suitability of the product.
or her written notice to the BSFI during the (b) Customer’s Declaration Form - to
cooling-off period. The BSFI may however confirm his acceptance and understanding
collect or recover reasonable amount of of the highlighted features of the product.
processing fees. It is further recognized that (c) FNA, Client Suitability and
there may be a need for some qualification Declaration Form should be duly completed
to an automatic right of cooling off. For to make sure that the product sold is
example, the right should not apply where suitable and affordable for the customer.
there has been a drawdown of a credit e. Institutional culture of fair and
facility and a BSFI should be able to recover responsible treatment of clients
any loss arising from an early withdrawal
(1) There should be a Code of Conduct
of a fixed rate term deposit which loss arises
(Code) applicable to all staff, spelling out
because of a difference in interest rates. This
the organizational values and standards of
would be in addition to any reasonable
professional conduct that uphold protection
administrative fees associated with closure
of customers. This Code should be reviewed
of the term deposit. and approved by the Board. The staff signs
d. Objectivity a document by which they acknowledge that
(1) Deal fairly, honestly, and in good they will abide by the Code and not engage
faith with customers and avoid making in the behaviors prohibited as provided for
statements that are untrue or omitting in the Code. To ensure adherence to the
information which are necessary to prevent Code, the BSFI is required to implement
the statement from being false or misleading. measures to determine whether the
(2) Present a balanced view when principles of consumer protection are
selling a product or service. While the BSFI observed, the clients’ concerns are
highlights the advantages of a product/ appropriately addressed and problems are
service, the customer’s attention should also resolved in a timely manner. These may
be drawn to its disadvantages and downside include among others, the regular conduct
risks. of customer satisfaction survey.
(3) Ensure that recommendations made (2) Ensure that recruitment and training
to customer are clearly justified and policies are aligned around fair and
explained to the customer and are properly responsible treatment of clients.
documented. If the requested products are (3) Ensure that staff, specifically those
of higher risk rating than a customer’s risk who interact directly with customers,
tolerance assessment results, the BSFI should receive adequate training suitable for the

Part IV -Page 9
§ 4402S.3 - 4402S.4
14.12.31
complexity of the products or services they f. Remuneration Structure

sell. (1) Design remuneration structure for
(4) Ensure that collection practices are staff of BSFI and authorized agents in a
covered during the initial training of all staff manner that encourages responsible
involved in collections (loan officers, business conduct, fair treatment and
collections staff, and branch managers). In avoidance/mitigation of conflicts of interest.
particular, collection staff should receive (2) Disclose to the customers the
training in acceptable debt collection remuneration structure where appropriate,
practices and loan recovery procedures. such as when potential conflicts of interest
(5) Strictly comply with BSP’s existing cannot be managed or avoided.
regulation on what constitutes unfair debt (3) Ensure adequate procedures and
collection practices. The BSFI’s Code of controls so that sales staff are not
Conduct should clearly spell out the specific remunerated based solely on sales
standards of professional conduct that are performance but that other factors, including
expected of all staff involved in collection customer’s satisfaction (in terms of number
(including outsourced staff). of customer complaints served/settled) and
(6) Institute policy that guarantees that compliance with regulatory requirements,
clients receive a fair price for any foreclosed best practices guidelines, and Code of
assets and has procedures to ensure that Conduct in which certain principles are
collateral seizing is respectful of clients’ related to best interest of customers,
rights. satisfactory audit/compliance review results
(7) Ensure that Managers and Supervisors and complaint investigation results, are
review ethical behavior, professional taken into account.
conduct, and quality of interaction with (Circular No. 857 dated 21 November 2014)
customers as part of staff performance
evaluations. §4402S.4 Effective Recourse. Financial
(8) Have a system or internal processes consumers should be provided with
in place to detect and respond to customer accessible, affordable, independent, fair,
mistreatment as well as serious infractions. accountable, timely, and efficient means for
In case of violation of Code of Conduct (e.g., resolving complaints with their financial
harassment), sanctions shall be enforced. transactions. BSFIs should have in place
(9) Inform staff of penalties for non- mechanisms for complaint handling and
compliance with Code of Conduct. redress.
(10) Perform appropriate due diligence The BSFI demonstrates the ability to
before selecting the authorized agents/ provide effective recourse if it is able to:
outsourced parties (such as taking into a. Establish an effective Consumer
account the agents’ integrity, Assistance Management System (CAMS).
professionalism, financial soundness, Appendix S-10 provides for the minimum
operational capability and capacity, and requirements of an effective CAMS.
compatibility with the FI’s corporate culture) b. Develop internal policies and
and implement controls to monitor the practices, including time for processing,
agents’ performance on a continuous basis. complaint response, and customer access.
The BSFI retains ultimate accountability for c. Maintain an up-to-date log and
outsourced activities. records of all complaints from customers
(11) Disseminate the main aspect of the subject to the complaints procedure. This
Code of Conduct to clients through printed log must contain the following:
media or other appropriate means. (1) Details of each complaint;

Part IV - Page 10
§§ 4402S.4 - 4402S.5
14.12.31
(2) The date the complaint was received; and education strategy and corporate
(3) A summary of the BSFI’s response; governance. It is an integral component of
(4) Details of any other relevant the BSFI’s ongoing interaction and
correspondence or records; relationship with clients. Dedicated and
(5) The action taken to resolve each adequate resources should be provided for
complaint; and the financial education initiatives.
(6) The date the complaint was resolved. b. Develop financial education and
d. Ensure that information on how to awareness programs, either on their own
make a complaint is clearly visible in the or in partnership or collaboration with
BSFI’s premises and on their websites. industry associations, which contribute to
e. Undertake an analysis of the patterns the improvement of their clients’ knowledge
of complaints from customers on a regular and understanding of their rights and
basis including investigating whether responsibilities, basic information and risks
complaints indicate an isolated issue or a of financial products and services, and
more widespread issue for consumers. This ability to make informed financial decisions
analysis of consumer complaints must be and participate in economic activities.
escalated to the BSFI’s compliance/risk Financial education programs should be
management function and senior designed to meet the needs and financial
management. literacy level of target audiences, as well as
f. Provide for adequate resources to those that will reflect how target audience
handle financial consumer complaints prefers to receive financial information.
efficiently and effectively. Staff handling These may include:
complaints should have appropriate (1) Delivering public awareness
experience, knowledge, and expertise. campaigns and information resources that
Depending on the BSFI’s size and would teach consumers on certain aspects
complexity of operation, a Senior staff of their financial lives particularly, budgeting,
member should be appointed to be in financial planning, saving, investing,
charge of the complaint handling process. borrowing, retirement planning, and self-
protection against fraud.
(2) Developing financial education tools
§4402S.5 Financial education and
or information materials that are updated
awareness. Financial education initiatives
and readily understood and transparent such
give consumers the knowledge, skills, and
as customized advice and guidance (face to
confidence to understand and evaluate the
face training); printed brochures, flyers,
information they receive and empower them
posters, training videos (e.g., about money
to make informed financial decisions.
management, debt management, saving),
Because BSFIs deal directly with financial
and newsletters; websites, and interactive
consumers, they have the reach, expertise,
and established relationships necessary to calculators that deliver key messages and
deliver financial education. Financial “call to action” concerning better money
education should be integral to the good management (e.g., protect your money,
governance of the BSFIs. know your product, read and understand
The BSFI demonstrates this principle the T&C, check your statements, pay credit
through various means and in particular: card bills on time, safeguard your Personal
a. Have a clear and defined financial Identification Number, understand fees and
education and awareness program as part charges) and consumer responsibility to ask
of a wider financial consumer protection the right questions.

Part IV - Page 11
§§ 4402S.5 - 4403S
14.12.31
(3) Distributing to customers, at the point (3) Market monitoring; and

of sale, a pamphlet on questions, which (4) Bangko Sentral Consumer Assistance
customers need to ask before accepting a Mechanism
financial product or service. c. The following enforcement action
c. Clearly distinguish between financial may be taken depending on:
education from commercial advice. Any (1) Rating-based enforcement actions for
financial advice for business purposes on-site periodic assessment. To implement
should be transparent. Disclose clearly any the foregoing enforcement actions, the
commercial nature where it is also being following rules shall apply:
promoted as a financial education initiative. (a) A Consumer Protection Rating (CPR)
It should train staff on financial education of 4 will require no enforcement action.
and develop codes of conduct for the (b) A CPR of 3 will require issuance of
provision of general advice about a written reminder on consumer protection
investments and borrowings, not linked to areas that may lead to weaknesses in the
the supply of a specific product. BSFI’s Consumer Protection Framework.
d. Provide via the internet or through (c) A CPR of 2 will require a written
printed publications unbiased and Action Plan in response to the written
independent information to consumers reminder issued by the BSP. The written
through comparative information about the Action Plan shall be duly approved by the
price and other key features, benefits and Board. It shall aim to correct the identified
risks, and associated fees and charges of weaknesses in the BSFI’s Consumer
products and services. Protection Framework or the noted
e. Regularly track, monitor, and assess violations of the BSP Regulations on
campaigns and programs and use the results Consumer Protection. FCPD shall assess the
of the evaluation for continuous improvement. viability of the plan and shall monitor the
(Circular No. 857 dated 21 November 2014) BSFI’s performance.
(d) A CPR of 1 shall also be considered
C. ENFORCEMENT ACTIONS as poor/grossly inadequate Financial
Consumer Protection Framework. For this
Section 4403S Enforcement Actions reason, a written action plan fully
a. Enforcement is the implementation executable within ninety (90) days shall be
of corrective measures and imposition of prepared. The action plan shall be duly
sanctions to BSFIs to: approved by the Board aimed at instituting
(1) Ensure compliance with the BSP immediate and strong measures to restore
regulations on consumer protection and the BSFI to acceptable consumer protection
consumer protection laws and regulations; operating condition, where it does not pose
(2) Inform the management of the BSFIs any risk of financial loss or harm to the
of the consequences of their decisions and financial consumers.
actions; In the event of non-submission of the
(3) Instill discipline to the BSFIs; and written Action Plan within the deadline or
(4) Serve as deterrent to the commission failure to implement its action plan, FCPD
of violations. shall recommend appropriate enforcement
b. The bases for enforcement actions are actions on the BSFI and its responsible
the results of the: officers including monetary penalties to be
(1) On-site consumer protection computed on a daily basis until
framework assessment; improvements are satisfactorily
(2) Off-site surveillance; implemented.

Part IV - Page 12
§§ 4403S - 4499S
14.12.31
Composite Rating
Numerical 4 3 2 1
Rating
Adjectival Strong Acceptable Marginal Poor
Rating
Supervisory No cause for Minimal More than Immediate and
Approach supervisory supervisory normal close supervisory
concern concern supervisory attention and
concern monitoring
Enforcement None Written Written action Written action plan
Action reminder plan
Suspension of
introduction of
new products and
services or
suspension of
existing
products/services
that poses a
consumer
protection concern
or suspension of
further
distribution or
Issuance of
consumer products
and services
Table No. 2. Enforcement Actions for Consumer Protection Ratings
d. Enforcement actions for violations of consumer protection regulations

Depending on the seriousness and impact of the breaches of Bangko Sentral Regulations on
consumer protection and specific consumer protection rules and regulations, the following
administrative sanctions shall be imposed:
Administrative sanctions Whenever applicable, the following administrative sanctions

shall be imposed:
· Fines in amount as may be determined by the
Monetary Board to be appropriate;
·Stopping/suspending operations/products or restricting
approval of new operations/products;
·Requiring the withdrawal/modification of advertising/
marketing materials; and
·Requiring submission of additional reports for monitoring.
Table No. 3. Administrative Sanctions for Violations of Consumer
Protection Regulations.

Part IV - Page 13
§§ 4501S - 4599S
08.12.31
PART FIVE
Sections 4501S - 4599S (Reserved)

Part V - Page 1
§§ 4601S - 4601S.1
09.12.31
PART SIX
MISCELLANEOUS
A. OTHER OPERATIONS (1)-time monetary penalty on a per

transaction basis.
Section 4601S Fines and Other Charges. The (3) Continuing penalty refers to the
following regulations shall govern monetary penalty imposed on continuing
imposition of monetary penalties on offenses/violations on a per calendar day
NSSLAs, their trustees and/or officers and basis reckoned from the time the offense/
payment of such penalties or fines and other violation occurred or was committed until
charges by NSSLAs. the same was corrected/rectified.
(As amended by Circualr No. 585 dated 15 October 2007) (4) Transactional penalty refers to a
one (1)-time penalty imposed on a
§ 4601S.1 Guidelines on the imposition transactional offense/violation.
of monetary penalties; payment of penalties b. Basis for the computation of the
or fines. The following are the guidelines period or duration of penalty. The
on the imposition of monetary penalties on computation of the period or duration of all
NSSLAs, their trustees and/or officers and penalties shall be based on calendar days.
the payment of such penalties or fines and For this purpose the terms “per banking
other charges: day”, “per business day”, “per day”
a. Definition of terms. For purposes of and/or “a day” as used in this Manual, and
the imposition of monetary penalties, the other BSP rules and regulations shall mean
following definitions are adopted: “per calendar day” and/or “calendar day”
(1) Continuing offenses/violations are as the case may be.
acts, ommisions or transactions entered c. Additional charge for late payment
into, in violation of laws, BSP rules and of monetary penalty. Late payment of
regulations, Monetary Board directives, monetary penalty shall be subject to an
and orders of the Governor which persist additional charge of six percent (6%) per
from the time the particular acts were annum to be reckoned from the business
committed or omitted or the transactions day immediately following the day said
were entered into until the same were penalty becomes due and payable up to the
corrected/rectified by subsequent acts or day of actual payment.
transactions. They shall be penalized on d. Appeal or request for reconsideration.
a per calendar day basis from the time the A one (1)-time appeal or request for
acts were committed/omitted or the reconsideration on the monetary penalty
transactions were effected up to the time approved by the Governor/Monetary Board
they were corrected/rectified. to be imposed on the NSSLA, its directors
(2) Transactional offenses/violations are and/or officers shall be allowed: Provided,
acts, omissions or transactions entered into That the same is filed with the appropriate
in violation of laws, BSP rules and department of the SES within fifteen (15)
regulations, Monetary Board directives, and calendar days from receipt of the Statement
orders of the Governor which cannot be of Account/billing letter. The appropriate
corrected/rectified by subsuquent acts or department of the SES shall evaluate the
transactions. They shall be meted with one appeal or request for reconsideration of

Part VI - Page 1
§§ 4601S.1 - 4631S
09.12.31
the NSSLA/individual and make Sec. 4631S Revocation/Suspension of

recommendations thereon within thirty (30) Non-Stock Savings and Loan Association
calendar days from receipt thereof. The License. In reference to Section 22 of
appeal or request for reconsideration on the R.A. No. 8367 or the “Revised Non-Stock
monetary penalty approved by the Savings and Loan Association Act of 1997”,
Governor/Monetary Board shall be elevated the Monetary Board, upon due notice and
to the Monetary Board for resolution/ hearing, has the authority to either revoke
decision. The running of the penalty period or suspend the license of any NSSLA for
in case of continuing penalty and/or the such period as it deems necessary, based
period for computing additonal charge shall on any of the following grounds:
be interrupted from the time the appeal or a. Suspension of license:
request for reconsideration was received by (1) Repeated violations [uncorrected
the appropriate department of the SES up to similar examination findings for the last two
the time that the notice of the Monetary (2) examinations, regular or special] of any
Board decision was received by the NSSLA/ of the provisions of R.A. No. 8367, and/or
individual concerned. any rules or regulations promulgated to
e. Due date; payment of penalty or implement said law, or BSP directives
fines. The penalty approved by the and/or instructions; and
Governor/MB to be imposed on the NSSLA, (2) Paid-up capital is impaired by
its directors and/or officers shall become due continuing losses for the last two (2) fiscal
and payable fifteen (15) calendar days from years.
receipt of the Statement of Account from the Lifting of the suspension of license shall
BSP. For NSSLAs which maintain DDA with be approved by the Monetary Board upon
the BSP, penalties which remain unpaid after recommendation of the appropriate BSP
the lapse of the fifteen-day period shall be supervising department.
automatically debited against their b. Revocation of license:
corresponding DDA on the following (1) When the solvency of the NSSLA is
business day without additional charge. If imperiled by losses and irregularities;
the balance of the concerned NSSLA’s DDA (2) When the NSSLA willfully violates
is insufficient to cover the amount of the any provision of R.A. No. 8367, any rule or
penalty, said penalty shall already be subject regulation promulgated to implement said
to an additional charge of six percent (6%) law and BSP directives and/or instructions;
per annum to be reckoned from the business (3) When the NSSLA is conducting
day immediately following the end of said business in an unsafe and unsound manner;
fifteen (15)-day period up to the day of actual (4) When it is unable to pay its
payment. liabilities as they become due in the ordinary
Failure to settle the full amount of the course of business;
fines within the period or on the day (5) When it has insufficient realizable
prescribed herein shall, in addition to the assets, as determined by the BSP, to meet
additonal penalty as provided in item “c” its liabilities;
above, make an NSSLA, its trustees and (6) When it cannot continue in
officers liable to the sanctions imposed business without involving probable losses
under Sec. 4199S. to its members or creditors; and
(As amended by Circular Nos. 662 dated 09 September 2009 and (7) When it has willfully violated a cease
585 dated 15 October 2007) and desist order of the Monetary Board
involving acts or transactions which amount to
Secs. 4602S - 4630S (Reserved) fraud or a dissipation of assets of the institution.

Part VI - Page 2
§§ 4631S - 4642S.2
09.12.31
As to the effects of the revocation/ money (e-money) and the operations of

suspension of license of the NSSLA, the electronic money issuers (EMIs).
NSSLA is prohibited from engaging in the (Circular No. 649 dated 09 March 2009)
business of accumulating the savings of its
members and using such accumulations for § 4642S.1 Declaration of policy. It is
loans to its members, subject to applicable the policy of the BSP to foster the
sanctions and penalties provided by law in development of efficient and convenient
case of violation thereof. After the cessation retail payment and fund transfer mechanism
of its operations due to revocation of its in the Philippines. The availability and
license, the NSSLA should proceed with its acceptance of e-money as a retail payment
dissolution, in acccordance with the medium will be promoted by providing the
provisions under the Corporation Code. The necessary safeguards and controls to
dissolution of a corporation involves the mitigate the risks associated in an e-money
termination of its corporate existence, at business.
least, as far as the right to go on doing (Circular No. 649 dated 09 March 2009)
ordinary business is concerned, and the
winding up of its affairs, the payments of § 4642S.2 Definitions
its debts and distribution of its assets among E-money shall mean monetary value as
the members or stakeholders or other represented by a claim on its issuer, that is -
persons involved. The board of trustees of a. electronically stored in an
the corporation also has the option of instrument or device;
adopting a plan for the distribution of its b. issued against receipt of funds of an
assets, as stated under Section 95 of the amount not lesser in value than the
Corporation Code. monetary value issued;
After the revocation/suspension of its c. accepted as a means of payment
license, the Monetary Board may direct the by persons or entities other than the
board of trustees of the NSSLA to proceed issuer;
with the voluntary dissolution of the d. withdrawable in cash or cash
corporation. In the event that the board of equivalent; and
trustees refuses to effectuate such e. issued in accordance with this
dissolution, the Monetary Board may refer Section.
the matter to the Solicitor General for the Electronic money issuer shall be
filing of a quo warranto case against the classified as follows:
corporation in accordance with the a. Banks (hereinafter called EMI-
provisions of the Corporation Code. Bank);
b. NBFI supervised by the BSP
Secs. 4632S - 4640S (Reserved) (hereinafter called EMI-NBFI); and
c. Non-bank institutions registered
Sec. 4641S Electronic Services. The with the BSP as a money transfer agent
guidelines concerning electronic activities, under Sec. 4511N of the MORNBFI
as may be applicable, are found in Sec. (hereinafter called EMI-Others).
4701Q and its Subsections. For purposes of this Section:
(Circular No. 649 dated 09 March 2009) a. Electronic instruments or devices
shall mean cash cards, e-wallets accessible
Sec. 4642S Issuance and Operations of via mobile phones or other access device,
Electronic Money. The following guidelines stored value cards, and other similar
shall govern the issuance of electronic products.

Part VI - Page 3
§§ 4642S.2 - 4642S.4
09.12.31
b. E-money issued by NSSLAs shall e. It is the responsibility of EMIs to

not be considered as deposits. ensure that their distributors/e-money agents
(Circular No. 649 dated 09 March 2009) comply with all applicable requirements of
the Anti-Money Laundering laws, rules and
§ 4642S.3 Prior Bangko Sentral approval regulations.
NSSLAs planning to be an EMI-NBFI shall f. EMIs shall provide an acceptable
comply with the requirements of Sec. 4641S redress mechanism to address the
and with Sec. 4190Q, when applicable. complaints of its customers.
(Circular No. 649 dated 09 March 2009) g. EMIs shall disclose in writing and its
customers shall signify agreement to the
§ 4642S.4 Common provisions. The information embodied in Item “c” above upon
following provisions are applicable to all their participation in the e-money system. In
EMIs: addition, it shall provide clear guidance in
a. E-money instrument issued shall be English and Filipino on consumers’ right of
subject to aggregate monthly load limit of redemption, including conditions and fees for
P100,000 unless a higher amount has been redemption, if any. Information on available
approved by the BSP. In case an EMI issues redress procedures for complaints together
several e-money instruments to a person (e- with the address and contact information of
money holder), the total amount loaded in the issuer shall also be provided.
all the e-money instruments shall be h. Prior to the issuance of e-money,
consolidated in determining compliance EMIs should ensure that the following
with the aggregate monthly load limit; minimum systems and controls are in place:
b. EMIs shall put in place a system to (1) Sound and prudent management,
maintain accurate and complete record of administrative and accounting procedures
e-money instruments issued, the identity of and adequate internal control mechanisms;
e-money holders, and the individual and (2) Properly-designed computer
consolidated balances thereof. The system systems which are thoroughly tested prior
must have the capability to monitor the to implementation;
movement of e-money transactions and link (3) Appropriate security policies and
e-money instruments issued to common measures intended to safeguard the integrity,
e-money holders. The susceptibility of a authenticity and confidentiality of data and
system to intentional or unintentional operating processes;
misreporting of transaction and balances (4) Adequate business continuity and
shall be sufficient ground for imposition by disaster recovery plan; and
the BSP of sanctions, as may be applicable. (5) Effective audit function to provide
c. E-money may only be redeemed at periodic review of the security control
face value. It shall not earn interest nor rewards environment and critical systems.
and other similar incentives convertible to i. EMIs shall provide the SDC
cash, nor be purchased at a discount. quarterly statements containing, among
E-money is not considered a deposit, hence, others, information on investments,
it is not insured with the PDIC. volume of transactions, total outstanding
d. EMIs shall not ensure that e-money e-money balances, and liquid assets in
instruments clearly identify the issuer who such forms as may be prescribed later on.
is ultimately responsible to the e-money j. EMIs shall notify the BSP in writing
holders. This shall be communicated to the of any change or enhancement in the
client who shall acknowledge the same in e-money facility thirty (30) days prior to
writing. implementation. If said change or

Part VI - Page 4
§§ 4642S.4 - 4642S.11
10.12.31
enhancement requires prior Bangko Sentral Nature of Violation/ Sanction/Penalties

approval, the same shall be evaluated Exception
accordingly. Any change or enhancement 3. Violation/s of Penalties and sanctions
that shall expand the scope or change the this Section under the
abovementioned laws
nature of the e-money instrument shall be
and other applicable
subject to prior approval of the Deputy
laws, rules and
Governor, SES. These changes or regulations
enhancements may include the following:
(1) Additional capabilities of the In addition, the susceptibility of a
e-money instrument/s, like access to new system to intentional or unintentional
channels (e.g., inclusion of internet misreporting of transactions and balances
channel in addition to merchant Point of shall be sufficient ground for appropriate
Sale terminals); Bangko Sentral action or imposition of
(2) Change in technology service sanctions, whenever applicable.
providers and other major partners in the (Circular No. 649 dated 09 March 2009)
e-money business (excluding partner
merchants), if any; and § 4642S.7 Transitory provisions
(3) Other changes or enhancements.
EMI-NBFIs granted authority to issue
(Circular No. 649 dated 09 March 2009)
e-money prior to 26 March 2009 may
continue to exercise such authority:
§ 4642S.5 Quasi-bank license
Provided, That it shall submit to the
requirement. EMI-NBFIs and EMI-Others that
Bangko Sentral, within one (1) month
engage in lending activities must secure a
from 26 March 2009 a certification
quasi-banking license from the Bangko Sentral.
signed by the President or Officer with
(Circular No. 649 dated 09 March 2009)
equivalent rank and function that it is
§ 4642S.6 Sanctions. Monetary in compliance with all the applicable
penalties and other sanctions for the requirements of this Section.
following violations committed by EMI- Otherwise, they are required to submit
NBFIs shall be imposed: within the same period the measures
they will undertake, with the
Nature of Violation/ Sanction/Penalties corresponding timelines, to conform to
Exception the provisions that they have not
1. Issuing e-money Applicable penalties complied with, subject to Bangko
without prior Bangko under Sections 36 & Sentral approval.
Sentral approval 37 of R.A. No. 7653; (Circular No. 649 dated 09 March 2009)
Watchlisting of
owners/partners/ §§ 4642S.8 - 4642S.10 (Reserved)
principal officers
2. Violation of any Applicable penalties
of the provisions of prescribed under
§ 4642S.11 Outsourcing of services
R.A. No. 9160 (Anti- the Act by Electronic Money Issuers (EMIs) to
Money Laundering Electronic Money Network Service
Law of 2001 as Providers (EMNSP). The guidelines on
amended by R.A. outsourcing of services by Electronic
No. 9194) and its Money Issuers (EMIs) to Electronic Money
implementing rules Network Service Providers (EMNSP) are
and regulations shown in Appendix Q-55.

Part VI - Page 5
§§ 4642S.11 - 4655S
14.12.31
Sanctions. Violations committed by of the Bangko Sentral: Provided, however, That

EMIs pertaining to outsourcing activities to in the case of NSSLAs under examination, the
EMNSP shall be subject to monetary head of the appropriate department of the SES
penalties as graduated under Appendix may furnish findings of examination to the office
Q-39 and/or other non-monetary sanctions or firm where such NSSLAs do business.
under Section 37 of RA No. 7653. All deposits of whatever nature with
Transitory provisions. EMIs that were NSSLAs are considered absolutely
granted an authority to outsource their e- confidential in nature, and may not be
money activities to an EMNSP may continue examined, inquired or looked into by any
to exercise such authority provided that they person, government official, bureau or
have to conform to the provisions of office, except upon written permission of
Appendix Q-55 within a six (6)-month period the depositor, or in cases of impeachment,
from 20 January 2011. or upon order of competent court in cases
(Circular 704 dated 22 December 2010) of bribery or dereliction of duty of public officials
or in cases where the money deposited or
invested is the subject matter of litigation.
Sec. 4650S Philippine and Foreign Currency No official or employee of NSSLAs shall
Notes and Coins. The rules and regulations disclose to any person any information
that shall govern the treatment and disposition concerning said deposits, except in cases
of counterfeit Philippine and foreign currency mentioned in the preceding paragraph. Any
notes and coins, the reproduction and/or use official or employee of NSSLAs who violates
of facsimiles of legal tender Philippine this Section shall be punished under R.A.
currency notes and coins, the replacement and No. 1405, as amended.
redemption of legal tender Philippine currency
Sec. 4653S Examination by the Bangko
notes and coins considered mutilated or unfit Sentral. The head of the appropriate
for circulation, and the treatment and department of the SES, personally or by
disposition of Philippine currency notes and deputy, shall make at least once a year and
coins called in for replacement are provided at such other times as he or the Monetary
in Section 4950Q. Board may deem necessary and expedient,
(Circular No. 829 dated 13 March 2014, M-2009-021 dated an examination, inspection or investigation
16 June 2009)
of the books and records, business affairs,
B. SUNDRY PROVISIONS administration and financial condition of
NSSLAs.
Sec. 4651S Notice of Dissolution
NSSLAs contemplating to dissolve shall give Sec. 4654S Applicability of Other Rules
written notice thereof to the Monetary Board Other rules and regulations applicable to
through the appropriate department of the SES the examination of thrift banks, insofar as
at least thirty (30) days before taking steps to they are applicable and not inconsistent with
these rules shall apply to NSSLAs.
effect dissolution.
Sec. 4655S Annual Supervisory Fees
Sec. 4652S Confidential Information
The prescribed rate of annual supervisory fees
No trustee, officer or employee of NSSLAs
for an NSSLA, beginning assessable year 2012
or of the Bangko Sentral shall disclose any
shall be one-sixty-fifth of one percent (1/65 of
information relating to member-borrowers and 1%) of its Average Assessable Assets (AAA) of
their applications or to the operations of the the immediately preceding year but shall not
NSSLAs unless permitted by the Monetary Board exceed the maximum amount provided below:

Part VI - Page 6
§§ 4655S - 4657S.9
13.12.31
Total AAA of Maximum Sec. 4657S Non-Stock Savings and Loan

NSSLA Amount of Associations Premises and Other Fixed
Annual Fees Assets. The following rules shall govern
the premises and other fixed assets of
>P1.0 billion P500,000.00 NSSLAs.
>P750.0 P400,000.00
million - P1.0 § 4657S.1 Accounting for non-stock
billion savings and loans associations premises;
>P500.0 P200,000.00 other fixed assets. NSSLAs premises,
million - furniture, fixture and equipment shall be
P750.0 million accounted for using the cost model under
>P250.0 P100,000.00 PAS 16 "Property, Plant and Equipment".
million - (Circular No. 494 dated 20 September 2005)
P500.0 million
>P100.0 P 50,000.00 § 4657S.2 (Reserved)
million -
P250.0 million § 4657S.3 Reclassification of real and
other properties acquired as non-stock
Up to P100.0 P 10,000.00
savings and loans association premises
million
Real and Other Properties Acquired (ROPA)
reclassified either as Real Property- Land or
Provided, That the minimum amount of
Real Property-Building shall be booked at
annual fees of NSSLAs with AAA of up to
their ROPA balance, net of any valuation
P100.0 million shall be P10,000.00. reserves: Provided, That only such acquired
The annual supervisory fee shall be asset or a portion thereof that will be
payable within thirty (30) days from receipt immediately used or earmarked for future
of the billing statement from the Bangko use may be reclassified and booked as Real
Sentral. Failure to pay the annual fee within Property-Land/Building.
the prescribed period shall subject the NSSLAs, prior to the reclassification of
NSSLA to administrative sanctions. their ROPA accounts to Real Property-Land/
For purposes of computing the annual Building, shall first secure prior Bangko
supervisory fees, AAA shall be the Sentral approval before effecting the
summation of end-of-quarter total reclassification and shall submit, in case of
assessable assets (end-of-quarter total assets future use, justification and plans for
per balance sheet, after deducting cash on expansion/use.
hand and amounts due from banks) divided
by the number of quarters in operation §§ 4657S.4 - 4657S.8 (Reserved)
during the particular assessment period.
(As amended by Circular No. 789 dated 28 February 2013) § 4657S.9 Batas Pambansa Blg. 344 -
An Act to Enhance the Mobility of Disabled
Sec. 4656S Basic Law Governing Non- Persons by Requiring Certain Buildings,
Stock Savings and Loan Associations Institutions, Establishments and Public
R.A. No. 8367, as amended, also known Utilities to Install Facilities and Other
as the "Revised Non-Stock Savings and Devices. In order to promote the realization
Loan Association Act of 1997", regulates of the rights of disabled persons to
the organization and operation of NSSLAs. participate fully in the social life and the

Part VI - Page 7
§§ 4657S.9 - 4660S
13.12.31
development of the societies in which they in the transaction counters of all NSSLA
live and the enjoyment of the opportunities branches and/or offices.
available to other citizens, no license or (Circular No. 805 dated 08 August 2013)
permit for the construction, repair or
renovation of public and private buildings Secs. 4658S - 4659S (Reserved)
for public use, educational institutions,
airports, sports and recreation centers and Sec. 4660S Disclosure of Remittance
complexes, shopping centers or Charges and Other Relevant Information
establishments, public parking places, It is the policy of the Bangko Sentral to
workplaces, public utilities, shall be granted promote the efficient delivery of
or issued unless the owner or operator competitively-priced remittance services by
thereof shall install and incorporate in such banks and other remittance service providers
building, establishment or public utility, by promoting competition and the use of
such architectural facilities or structural innovative payment systems, strengthening
features as shall reasonably enhance the the financial infrastructure, enhancing
mobility of disabled persons such as access to formal remittance channels in the
sidewalks, ramps, railings, and the like. If source and destination countries, deepening
feasible, all such existing buildings, the financial literacy of consumers, and
institutions, establishments, or public improving transparency in remittance
utilities may be renovated or altered to transactions, consistent with sound
enable the disabled persons to have access practices.
to them. Towards this end, NBFIs under Bangko
Sentral supervision, including FXDs/MCs
§ 4657S.10. Republic Act No. 9994 – and RAs, providing overseas remittance
An Act Granting Additional Benefits and services shall disclose to the remittance
Privileges to Senior Citizens, Further sender and to the recipient/beneficiary, the
Amending Republic Act No. 7432 of 1992, following minimum items of information
as Amended by Republic Act No. 9257 of regarding remittance transactions, as
2003. To be able to give full support to the defined herein:
improvement of the total well-being of the a. Transfer/remittance fee - charge for
elderly and their full participation in society, processing/sending the remittance from the
and to motivate and encourage them to country of origin to the country of
contribute to nation building, senior citizens destination and/or charge for receiving the
shall be provided with express lanes in all remittance at the country of destination;
branches and offices of NSSLAs. If the b. Exchange rate - rate of conversion
provision of express lanes is logistically from foreign currency to local currency, e.g.,
impossible in any particular branch or office peso-dollar rate;
of any NSSLA, said branch or office shall c. Exchange rate differential/spread -
ensure that senior citizens are accorded foreign exchange mark-up or the difference
priority service. The provision of express between the prevailing Bangko Sentral
lanes and/or priority service shall be made reference/guiding rate and the exchange/
known to the general public through a conversion rate;
clearly written notice prominently displayed d. Other currency conversion charges -

Part VI - Page 8
§§ 4660S - 4699S
13.12.31
commisions or service fees, if any; No. 9160, as amended, or of this Section,

e. Other related charges - e.g., the officer(s) or other persons responsible
surcharges, postage, text message or for such violation shall be punished by a
telegram; fine of not less than P50 thousand nor more
f. Amount/currency paid out in the than P200 thousand or by imprisonment of
recipient country - exact amount of money not less than two (2) years nor more than
the recipient should receive in local currency ten (10) years, or both, at the discretion of
or foreign currency; and the court pursuant to Section 36 of R.A. No.
g. Delivery time to recipients/ 7653, otherwise known as “The New
beneficiaries - delivery period of remittance Central Bank Act”.
to beneficiary stated in number of days, b. Without prejudice to the criminal
hours or minutes. sanctions prescribed above against the
Non-bank remittance service providers culpable persons, the Monetary Board may,
shall likewise post said information in their at its discretion, impose upon any covered
respective websites and display them institution, its directors and/or officers for
prominently in conspicuous places within any violation of Section 9 of R.A. No. 9160,
their premises and/or remittance/service as amended, the administrative sanctions
centers. provided under Section 37 of R.A. No. 7653.
(Circular No. 534 dated 26 June 2006)
Sec. 4695S Valid Identification Cards for
Sec. 4691S Anti-Money Laundering Financial Transactions. The provisions of
Regulations. Covered institutions, including Part 8 of the Q Regulations on valid
their subsidiaries and affiliates, shall comply identification documents shall apply.
with the provisions of Part 8 of (Circular No. 564 dated 03 April 2007, as amended by Circular
Q Regulations, R.A. No. 9160 (Anti-Money Nos. 792 dated 03 May 2013, 706 dated 05 January 2011,
Laundering Act of 2001), as amended, and 657 dated 16 June 2009 and 608 dated 20 May 2008)
its IRR.
(As amended by Circular Nos. 706 dated 05 January 2011, Secs. 4696S - 4698S (Reserved)
661 dated 01 September 2009 and 612 dated 13 June 2008)
Sec. 4699S General Provision on Sanctions
§§ 4691S.1 - 4691S.8 (Reserved) Unless otherwise provided, any violation
of the provisions of this Part shall be subject
§ 4691S.9 Sanctions and penalties to the sanctions provided in Sections 34,
a. Whenever a covered institution 35, 36 and 37 of R. A. No. 7653, whenever
violates the provisions of Section 9 of R.A. applicable.

Part VI - Page 9
APP. S-1
08.12.31
SAFEGUARDS IN BONDING OF NSSLA ACCOUNTABLE

OFFICERS AND EMPLOYEES
(Appendix to Sec. 4145S)
1. The Teller. He should not be depository bank will accept them and
allowed to accumulate more than a specific solely for deposit to its account. Thus, even
maximum amount to be determined by the in the remote possibility that someone
association but in no case to exceed presents a COCI stolen from the association
P10,000 in cash at any given time while in to one of its depository banks, it will not be
the performance of his duties. The accepted for encashment.
procedures in this regard are as follows: 2. The COCIs Clerk. In view of the
a. Cash. All cash in excess of the fact that all COCIs received by the tellers
maximum amount determined by the are stamped “non-negotiable” as detailed
association shall be turned over to the above, the COCIs clerk who records and
cashier. When deposits received by a teller processes these checks carries no
will increase his cash in excess of the accountabilities whatsoever. From the
maximum limit, the teller shall moment that a check is received up to the
immediately make a cash turn-over of, at moment that it is deposited to the account
least, the excess. Thus, although his of the association with one of its depository
transactions during the day may total more banks, that check is just a piece of paper to
than the maximum limit, the amount of be processed and recorded. It will only
money directly in his custody at any given reassume its negotiability upon its receipt
time will never exceed the limit. by the association’s depository bank. In
b. Checks and Other Cash Items cases, however, where checks are
(COCIs). All COCIs received by a teller received by mail, the COCIs clerk shall be
should be stamped as “non-negotiable.” charged with the duty of stamping the
The stamping should be made diagonally checks as “non-negotiable.”
on the face of the check. Thus, all checks 3. As an added precautionary
that are received by the tellers lose their measure, the manager/accountant/loan
further negotiability. There should, officer should check from time to time
however, be an agreement with the whether all COCIs received are stamped
association’s depository banks whereby “non-negotiable.” In the event that a COCI
they will accept for deposit only to the is not so stamped and it results in financial
account of the association the COCI loss on the part of the association, the
previously stamped by the tellers as “non- employee charged with the duty to stamp
negotiable.” Therefore, only the association and who failed to do so, shall be held
and nobody else can further negotiate these personally responsible, together with the
checks, and only the association’s manager/accountant/loan officer, for the loss.

Appendix S-I - Page 1
APP. S-2
14.12.31
LIST OF REPORTS REQUIRED FROM NON-STOCK SAVINGS AND LOAN ASSOCIATIONS

Category Form No. MOR Ref. Report Title Frequency Submission Deadline Submission Procedure
A-2 BSP 7-26-02H 4162S Consolidated Statement of Condition1 Quarterly on or before the end of Original to SDC
(As the immediately following
amended month
by M-029
dated
09.24.07
and Cir.
No. 837
dated
06.18.14)
A-2 Unnumbered 4691S Report on Suspicious Transactions As 10th business day from Original and duplicate -
(Rev. May transaction date of occurrence transaction/ Anti-Money Laundering
2002, as occurs knowledge Council (AMLC)
amended
by Cir.
No. 612
dated
06.03.08)
A-2 Unnumbered 4691S Report on Covered Transactions -do- -do- -do-
A-3 BSP 7-26-03H 4162S Consolidated Statement of Income and Quarterly on or before the end of Original to SDC
(As Expenses1 the immediately following
amended month
by M-029
dated
09.24.07
and Cir. No.
837 dated
06.18.14)
1
Revised reporting templates effective report ending 30 June 2014.
Page 1 of 4
APP. S-2
14.12.31
A-3 BSP 7-26-18.1H 4358S Copy of entry in NSSLA records of As 20th business day from Original - ISD I
written approval of majority of directors approved date of approval
on credit accommodation to directors
and officers with accompanying
Certification on Loans Granted to
Directors/Officers
A-3 Unnumbered 4162S Report on Borrowings of BSP Personnel Quarterly 15th banking day after Original to SDC
(CL-050 end of reference quarter
dated
10.04.07
and
CL-059
dated
11.28.07)
B 4172S Audited/Unaudited Financial Statements Annually 120th/60th day after Original - ISD I
required in Sec. 4181S accompanied by end of fiscal year as
annual report2 (to members, if any) required in Sec. 4181S
B SES II Form 15 4147S Biographical Data of Trustees/Officers Upon every 10th business day from date of Hard copy to appropriate
(NP08-TB) (As with rank of SVP and above with ID election/ election/re-election of the department of the SES
amended picture re-election or trustees/meeting of the board of
by Cir. No. appointment/ trustees in which the officers
758 dated promotion or if are appointed/promoted
05.11.12 change in name
and M-024 - Updated Bio-data in case of change of occurs 10th business day from the date
dated name due to change in civil status the change of name occurred
2
Required of NSSLAs with total resources of P 10 million or more
Page 2 of 4
APP. S-2
14.12.31
07.31.08) - Notarized list of the incumbent 10th business day from the
members of the board of trustees and election of the BOT
officers
B 4143S Duly accomplished and notarized Upon election/ 10th business day from date of Hard copy to appropriate
(Circular authorization form for querying the re-election or election/re-election of the department of the SES
No. 758 Bangko Sentral watchlist files appointment/ trustees/meeting of the board of
dated promotion as first trustees in which the officers
05.11.12) time trustee/ are appointed/promoted
officer within an
NSSLA
B Unnumbered 4143S List of Members of the Board of Trustees Annually 10th business day from the Hard copy to appropriate
(Circular and Officers election of the board of trustees department of the SES
No. 758
dated
05.11.12)
B BSP 7-26-20H 4162S Report on Crimes/Losses As crime/ See Annex S-2-a for guidelines -do-
incident on reporting crimes and losses
occurs
B 4306S.3 Notice/Application for Write-Off of As write-off 30th day prior to the -do-
Loans occurs intended date of write-off
B 4162S Board Resolution on NSSLA's As authorized 3rd day from date of resolution Hard copy to appropriate
signatories to reports submitted to department of the SES
Bangko Sentral
B General Information Sheet Annually 30th day from date of Drop Box - SEC Central
annual stockholders' Receiving Section
meeting Original - SEC
Duplicate - BSP
Page 3 of 4
APP. S-2
14.12.31
B Form I M-031 Report on Electronic Money Quarterly 15 banking days after e-mail -
Schedule 1 dated Transactions end of reference quarter sdcothers-emoney@
09.11.09 bsp.gov.ph
and Cir. Quarterly Statement of E-Money Hardcopy- SDC
No. 649 Transactions - Volume and Amount of E-
dated Money Transactions Quarterly
03.09.09 Statement of Liquidity Cover
Schedules
1 - E-Money Balances
B 4402S.4 Complaints Report Quarterly Not later than one (1) SDC
(Cir. No. month after the end of
857 dated every quarter
11.21.14)
Page 4 of 4
APP. S-2
08.12.31
Annex S-2-a
REPORTING GUIDELINES ON CRIMES/LOSSES
1. NSSLAs shall report on the a crime, when the amount involved per
following matters through the incident is P20,000 or more.
appropriate supervising and examining 2. The following guidelines shall be
department: observed in the preparation and
a. Crimes whether consummated, submission of the report.
frustrated or attempted against property/ a. The report shall be prepared in
facilities (such as robbery, theft, two (2) copies and shall be submitted
swindling or estafa, forgery and other within five (5) business days from
deceits) and other crimes involving loss/ knowledge of the crime or incident, the
destruction of property of the NSSLA original to the appropriate supervising
when the amount involved in each crime department and the duplicate to the BSP
is P20,000 or more. Security Coordinator, thru the Director,
Crimes involving NSSLA personnel, Security Investigation and Transport
regardless of whether or not such crimes Department.
involve the loss/destruction of property b. Where a thorough investigation
of the NSSLA, even if the amount and evaluation of facts is necessary to
involved is less than those above complete the report, an initial report
specified, shall likewise be reported to submitted within the five (5)-business day
the BSP. deadline may be accepted: Provided,
b. Incidents involving material loss, That a complete report is submitted not
destruction or damage to the institution’s later than fifteen (15) business days from
property/facilities, other than arising from termination of investigation.

Appendix S-2 - Page 4
APP. S-3
08.12.31
GUIDELINES ON PRESCRIBED REPORTS SIGNATORIES

AND SIGNATORY AUTHORIZATION
(Appendix to Subsec. 4162S.1)
Category A-1 reports shall be signed managers/officers in-charge. Likewise, the

by the chief executive officer, or in his signing authority in this category shall be
absence, by the executive vice-president, contained in a resolution approved by the
and by the comptroller, or in his absence, board of directors in the format prescribed
by the chief accountant, or by officers in Annex S-3-b.
holding equivalent positions. The
designated signatories in this category, Categories A-3 and B reports shall be
including their specimen signatures, shall signed by officers or their alternates, who
be contained in a resolution approved by shall be duly designated by the board of
the board of directors in the format directors. A copy of the board resolution,
prescribed in Annex S-3-a. with format as prescribed in Annex S-3-c.
Category A-2 reports of head offices Copies of the board resolutions on the
shall be signed by the president, executive report signatory designations shall be
vice-presidents, vice-presidents or officers submitted to the appropriate supervising
holding equivalent positions. Such reports and examining department of the BSP
of other offices/units (such as branches) within three (3) business days from the date
shall be signed by their respective of resolution.

APP. S-3
08.12.31
Annex S-3-a
FORMAT OF RESOLUTION FOR SIGNATORIES OF CATEGORY A-1 REPORTS
Resolution No. _____
Whereas, it is required under Subsec. 4162S.1 that Category A-1 reports be signed by the
Chief Executive Officer, or in his absence, by the Executive Vice-President, and by the
Comptroller, or in his absence, by the Chief Accountant, or by officers holding equivalent positions.
Whereas, it is also required that aforesaid officers of the institution be authorized under
a resolution duly approved by the institution's Board of Directors;
Whereas, we, the members of the Board of Directors of (Name of Institution) ,
are conscious that, in designating the officials who would sign said Category A-1 reports,
we are actually empowering and authorizing said officers to represent and act for or in behalf
of the Board of Directors in particular and (Name of Institution) in general;
Whereas, this Board has full faith and confidence in the institution's Chief Executive
Officer, Executive Vice-President, Comptroller and Chief Accountant, as the case may be,
and, therefore, assumes responsibility for all the acts which may be performed by aforesaid
officers under their delegated authority;
Now, therefore, we, the members of the Board of Directors, resolve, as it is hereby
resolved that:
1. Mr.____________ President _________________
Specimen Signature
or
Executive
2. Mr.____________ Vice-President _________________
Specimen Signature
and
3. Mr.____________ Comptroller _________________
Specimen Signature
or
Chief
4. Mr.____________ Accountant _________________
Specimen Signature
are hereby authorized to sign Category A-1 reports of (Name of Institution) .
Done in the City of ________________ Philippines, this ____day of , 20____.
CHAIRMAN OF THE BOARD
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
ATTESTED BY:
______________________
CORPORATE SECRETARY

APP. S-3
08.12.31
Annex S-3-b
FORMAT OF RESOLUTION FOR SIGNATORIES OF CATEGORY A-2 REPORTS
Whereas, it is required under Subsec. 4162S.1 that Category A-2 reports of head offices
be signed by the President, Executive Vice-Presidents, Vice-Presidents or officers holding
equivalent positions, and that such reports of other offices be signed by the respective
managers/officers-in-charge;
Whereas, we, the members of the Board of Directors of (Name of Institution) , are
conscious that, in designating the officials who would sign said Category A-2 reports, we are
actually empowering and authorizing said officers to represent and act for or in behalf of the
Board of Directors in particular and (Name of Institution) in general;
Whereas, this Board has full faith and confidence in the institution's President (and/or
the Executive Vice-President, etc., as the case may be) and, therefore, assumes responsibility
for all the acts which may be performed by aforesaid officers under their delegated authority;
resolved that:
Name of Officer Specimen Signature Position Title Report No.
_____________ ________________ __________ _________
are hereby authorized to sign the Category A-2 reports of (Name of Institution) .
Done in the City of ________________ Philippines, this ____day of ____, 20____.
_________________________
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
ATTESTED BY:
CORPORATE SECRETARY

APP. S-3
08.12.31
Annex S-3-c
FORMAT OF RESOLUTION FOR SIGNATORIES OF CATEGORIES

A-3 AND B REPORTS
Whereas, it is required under Subsec. 4162S.1 that Categories A-3 and B reports be
signed by officers or their alternates;
Whereas, we the members of the Board of Directors of (Name of Institution) , are
conscious that, in designating the officials who would sign said Categories A-3 and B reports,
we are actually empowering and authorizing said officers to represent and act for or in
behalf of the Board of Directors in particular and (Name of Institution) in general;
Whereas, this Board has full faith and confidence in the institution's authorized signatories
and, therefore, assumes responsibility for all the acts which may be performed by aforesaid
officers under their delegated authority;
resolved that:
Name of Authorized Signatory/Alternate Specimen Signature Position Title Report
1. Authorized
(Alternate)
2. Authorized
(Alternate)
etc.
are hereby authorized to sign the Category A-2 reports of (Name of Institution) .
Done in the City of ________________ Philippines, this ____day of ____, 20____.
_________________________
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
ATTESTED BY:
CORPORATE SECRETARY

APP. S-4
12.12.31
FORMAT OF DISCLOSURE STATEMENT ON

SMALL BUSINESS/RETAIL/CONSUMER CREDIT
[Appendix to Subsec. 4307S.2]
_________________________________
(Business Name of Creditor)
DISCLOSURE STATEMENT ON LOAN/CREDIT TRANSACTION

(As required under R.A. No. 3765, Truth in Lending Act)
NAME OF BORROWER
ADDRESS
1. LOAN AMOUNT P XXX
2. OTHER BANK CHARGES/DEDUCTIONS COLLECTED1 P XXX

a. Documentary/Science Stamps P
b. Mandatory Credit Insurance
c. Others (Specify)
3. NET PROCEEDS OF LOAN (Item 1 less Item 2) P XXX
4. SCHEDULE OF PAYMENTS
a. Single payment due on (date) P XXX
b. Installment Payments (Please see attached amortization schedule)
5. EFFECTIVE INTEREST RATE (Interest and Other Charges) XXX%

Explanation: The effective interest rate is higher than the contractual interest
rate of ___% because of some deductions in Item 2 above.
6. CONDITIONAL CHARGES THAT MAY BE IMPOSED (if applicable). Please specify manner of
imposition:
a. Late Charge P
b. Prepayment (penalty/refund)
c. Others (Specify)
CERTIFIED CORRECT:
_______________________________ _______________________________
(Signature of Creditor/Authorized Position
Representative Over Printed Name)
I ACKNOWLEDGE RECEIPT OF A COPY OF THIS STATEMENT PRIOR TO THE CONSUMMATION

OF THE CREDIT TRANSACTION.
_______________________________ _________________________
(Signature of Borrower over Date
Printed Name)
Notes:
¹ Itemize all charges including advance deductions
- Small business/Retail/Consumer Loans includes microfinance, auto (motor), salary, personal, medical,
educational and other loans of similar nature
- This document contains the minimum information required to be disclosed to the borrower and may be
enhanced to improve client information

APP. S-4
12.12.31
AMORTIZATION SCHEDULE
(Sample Only)
Installment Loan Principal Interest Total O/S Balance

(A) (B) (C) (D) (E) (F)
xxx xxx
1 xxx xxx xxx xxx
2 xxx xxx xxx xxx
3 xxx xxx xxx xxx
4 xxx xxx xxx xxx
5 xxx xxx xxx xxx
6 xxx xxx xxx xxx
7 xxx xxx xxx xxx
8 xxx xxx xxx xxx
9 xxx xxx xxx xxx
10 xxx xxx xxx xxx
11 xxx xxx xxx xxx
12 xxx xxx xxx xxx
Total xxx xxx xxx
Legends:
A - Number of installment periods based on loan term
B - Gross amount of loan
C - Installment payment on the principal
D - Installment payment on the interest
E - Total amortization payment for the installment period
F - Outstanding principal balance of the loan
(As amended byCircular No. 754 dated 17 April 2012 and M-2012-018 dated 19 April 2012)

APP. S-5
08.12.31
ABSTRACT OF “TRUTH IN LENDING ACT” (Republic Act No. 3765)

(Appendix to Subsec. 4307S.4)
Section 1. This Act shall be known as the (7) the percentage that the finance
“Truth in Lending Act.” charge bears to the total amount to be
financed expressed as a simple annual rate
Sec. 2. Declaration of Policy. It is hereby on the outstanding unpaid balance of the
declared to be the policy of the State to protect obligation.
its citizens from a lack of awareness of the
xxx xxx xxx
true cost of credit to the user by assuring a
full disclosure of such cost with a view of
Sec. 6. (a) Any creditor who in connection
preventing the uninformed use of credit to
with any credit transaction fails to disclose to
the detriment of the national economy.
any person any information in violation of
xxx xxx xxx this Act or any regulation issued thereunder
shall be liable to such person in the amount
Sec. 3. As used in this Act, the term - of P100 or in an amount equal to twice the
finance charge required by such creditor in
xxx xxx xxx
connection with such transaction, whichever
(3) “Finance charge” includes interest, fees, is the greater, except that such liability shall
service charges, discounts, and such other not exceed P2,000 on any credit transaction.
charges incident to the extension of credit
xxx xxx xxx
as the Board may by regulation prescribe.
(c) Any person who willfully violates
xxx xxx xxx
any provision of this Act or any regulation
issued thereunder shall be fined by not less
Sec. 4. Any creditor shall furnish to each
than P1,000 nor more than P5,000 or
person to whom credit is extended, prior
imprisonment for not less than 6 months
to the consummation of the transaction a
nor more than one year or both.
clear statement in writing setting forth, to
xxx xxx xxx
the extent applicable and in accordance
with rules and regulations prescribed by (d) Any final judgment hereafter
the Board, the following information: rendered in any criminal proceeding under
(1) the cash price or delivered price this Act to the effect that a defendant has
of the property or service to be acquired; willfully violated this Act shall be prima
(2) the amounts, if any, to be credited facie evidence against such defendant in
as down payment and/or trade-in; an action or proceeding brought by any
(3) the difference between the other party against such defendant under
amounts set forth under clauses (1) and (2); this Act as to all matters respecting which
(4) the charges, individually itemized, said judgment would be an estoppel as
which are paid or to be paid by such person between the parties thereto.
in connection with the transaction but which
are not incident to the extension of credit; Sec. 7. This Act shall become effective
(5) the total amount to be financed; upon approval.
(6) the finance charge expressed in
terms of pesos and centavos; and Approved, 22 June 1963.

APP. S-6
11.12.31
ANTI-MONEY LAUNDERING REGULATIONS

(Appendix to Section 4691S)
(Deleted pursuant to Circular No. 706 dated 05 January 2011)

APP. S-6
11.12.31
Annex S-6-a
CERTIFICATION OF COMPLIANCE
WITH ANTI-MONEY LAUNDERING REGULATIONS
(Deleted pursuant Circular No. 706 dated 05 January 2011)

APP. S-6
11.12.31
Annex S-6-b
AMLC Resolution No. 292
RULES ON SUBMISSION OF COVERED TRANSACTION REPORTS AND

SUSPICIOUS TRANSACTION REPORTS BY COVERED INSTITUTIONS1
(Annex to Appendix S-6)

APP. S-7
11.12.31
REVISED IMPLEMENTING RULES AND REGULATIONS

R.A. NO. 9160, AS AMENDED BY R.A. NO. 9194

APP. S-8
09.12.31
GUIDELINES TO GOVERN THE SELECTION, APPOINTMENT, REPORTING

REQUIREMENTS AND DELISTING OF EXTERNAL AUDITORS AND/OR
AUDITING FIRM OF COVERED ENTITIES
(Appendix to Secs. 4180S and 4190S)
Pursuant to Section 58 of the Republic B. COVERED ENTITIES

Act No. 8791, otherwise known as "The The proposed amendment shall apply
General Banking Law of 2000", and the to the following supervised institution, as
existing provisions of the executed categorized below, and their external
Memorandum of Agreement (hereinafter auditors:
referred to as the MOA) dated 12 August 1. Category A
2009, binding the Bangko Sentral ng a. UBs/KBs;
Pilipinas (BSP), Securities and Exchange b. Foreign banks and branches or
Commission (SEC), Professional subsidiaries of foreign banks, regardless of
Regulation Commission (IC) - Board of unimpaired capital; and
Accountancy (BOA) and the Insurance c. Banks, trust department of qualified
Commission (IC) for a simplified and banks and other trust entities with additional
synchronized accreditation requirements derivatives authority, pursuant to Sec. X611
for external auditor and/or auditing firm, regardless of classification, category and
the Monetary Board, in its Resolution No. capital position.
950 dated 02 July 2009, approved the 2. Category B
following revised rules and regulations a. TBs;
that shall govern the selection and b. QBs;
delisting by the BSP of covered institution c. Trust department of qualified banks
which under special laws are subject to and other trust entities;
BSP supervision. d. National Coop Banks; and
e. NBFIs with quasi-banking functions.
A. STATEMENT OF POLICY 3. Category C
It is the policy of the BSP to ensure a. RBs;
effective audit and supervision of banks, b. NSSLAs;
QBs, trust entities and/or NSSLAs c. Local Coop Banks; and
including their subsidiaries and affiliates d. Pawnshops.
engaged in allied activities and other FIs The above categories include their
which under special laws are subject to subsidiaries and affiliates engaged in allied
BSP supervision, and to ensure reliance activities and other FIs which are subject to
by BSP and the public on the opinion of BSP risk-based and consolidated supervision:
external auditors and auditing firms by Provided, That an external auditor who has
prescribing the rules and regulations that been selected by the BSP to audit covered
shall govern the selection, appointment, entities under Category A is automatically
reporting requirements and delisting for qualified to audit entities under Category B
external auditors and auditing firms of said and C and if selected by the BSP to audit
institutions, subject to the binding covered entities under Category B is
provisions and implementing regulations automatically qualified to audit entities under
of the aforesaid MOA. Category C.

APP. S-8
09.12.31
C. DEFINITION OF TERMS d. Recording of transactions without

The following terms shall be defined as substance;
follows: e. Intentional misapplication of
1. Audit – an examination of the accounting policies; or
financial statements of any issuer by an f. Omission of material information.
external auditor in compliance with the rules 5. Error - an intentional mistake in
of the BSP or the SEC in accordance with financial statements, which will reduce the
then applicable generally accepted auditing consolidated total assets of the company by
and accounting principles and standards, for five percent (5%). It may involve:
the purpose of expressing an opinion on a. Mathematical or clerical mistakes
such statements. in the underlying records and accounting
2. Non-audit services – any data;
professional services provided to the b. Oversight or misinterpretation of
covered institution by an external auditor, facts; or
other than those provided to a covered c. Unintentional misapplication of
institution in connection with an audit or a accounting policies.
review of the financial statements of said 6. Gross negligence - wanton or
covered institution. reckless disregard of the duty of due care in
3. Professional Standards - includes: complying with generally accepted auditing
(a) accounting principles that are standards.
(1) established by the standard setting body; 7. Material fact/information - any fact/
and (2) relevant to audit reports for particular information that could result in a change in
issuers, or dealt with in the quality control the market price or value of any of the
system of a particular registered public issuer’s securities, or would potentially affect
accounting firm; and (b) auditing standards, the investment decision of an investor.
standards for attestation engagements, 8. Subsidiary - a corporation or firm
quality control policies and procedures, more than fifty percent (50%) of the
ethical and competency standards, and outstanding voting stock of which is directly
independence standards that the BSP or SEC or indirectly owned, controlled or held with
determines (1) relate to the preparation or power to vote by a bank, QB, trust entity or
issuance of audit reports for issuers; and NSSLA.
(2) are established or adopted by the BSP or 9. Affiliate - a corporation, not more
promulgated as SEC rules. than fifty percent (50%) but not less than
4. Fraud – an intentional act by one (1) ten percent (10%) of the outstanding
or more individuals among management, voting stock of which is directly or
employees, or third parties that results in a indirectly owned, controlled or held with
misrepresentation of financial statements, power to vote by a bank, QB, trust entity
which will reduce the consolidated total or NSSLA and a juridical person that is
assets of the company by five percent (5%). under common control with the bank,
It may involve: QB, trust entity or NSSLA.
a. Manipulation, falsification or 10. Control - exists when the parent
alteration of records or documents; owns directly or indirectly more than one
b. Misappropriation of assets; half of the voting power of an enterprise
c. Suppression or omission of the unless, in exceptional circumstance, it can
effects of transactions from records or be clearly demonstrated that such
documents; ownership does not constitute control.

APP. S-8
09.12.31
Control may also exist even when D. GENERAL CONSIDERATION AND

ownership is one half or less of the voting LIMITATIONS OF THE SELECTION
power of an enterprise when there is: PROCEDURES
a. Power over more than one half of 1. Subject to mutual recognition
the voting rights by virtue of an agreement provision of the MOA and as implemented
with other stockholders; in this regulation, only external auditors and
b. Power to govern the financial and auditing firms included in the list of BSP
operating policies of the enterprise under a selected external auditors and auditing firms
statute or an agreement; shall be engaged by all the covered
c. Power to appoint or remove the institutions detailed in Item "B". The external
majority of the members of the board of auditor and/or auditing firm to be hired shall
directors or equivalent governing body; or also be in-charge of the audit of the entity’s
d. Power to cast the majority votes at subsidiaries and affiliates engaged in allied
meetings of the board of directors or activities: Provided, That the external auditor
equivalent governing body. and/or auditing firm shall be changed or the
11. External auditor - means a single lead and concurring partner shall be rotated
practitioner or a signing partner in an every five (5) years or earlier: Provided
auditing firm. further, That the rotation of the lead and
12. Auditing firm – includes a concurring partner shall have an interval of
proprietorship, partnership limited liability at least two (2) years.
company, limited liability partnership, 2. Category A covered entities which
corporation (if any), or other legal entity, have engaged their respective external
including any associated person of any of auditors and/or auditing firm for a
these entities, that is engaged in the practice consecutive period of five (5) years or more
of public accounting or preparing or issuing as of 18 September 2009 shall have a one
audit reports. (1)-year period from said date within which
13. Associate – any director, officer, to either change their external auditors
manager or any person occupying a similar and/or auditing firm or to rotate the lead
status or performing similar functions in the and/or concurring partner.
audit firm including employees performing 3. The selection of the external auditors
supervisory role in the auditing process. and/or auditing firm does not exonerate the
14. Partner - all partners including those covered institution or said auditors from
not performing audit engagements. their responsibilities. Financial statements
15. Lead partner – also referred to as filed with the BSP are still primarily the
engagement partner/partner-in-charge/ responsibility of the management of the
managing partner who is responsible for reporting institution and accordingly, the
signing the audit report on the consolidated fairness of the representations made
financial statements of the audit client, and therein is an implicit and integral part of
where relevant, the individual audit report the institution’s responsibility. The
of any entity whose financial statements independent certified public accountant’s
form part of the consolidated financial responsibility for the financial statements
statements. required to be filed with the BSP is
16. Concurring partner - the partner confined to the expression of his opinion,
who is responsible for reviewing the audit or lack thereof, on such statements which
report. he has audited/examined.
17. Auditor-in-charge – refers to the 4. The BSP shall not be liable for any
team leader of the audit engagement. damage or loss that may arise from its

APP. S-8
09.12.31
selection of the external auditors and/or will recommend deletion from the list even
auditing firm to be engaged by banks for prior to the three (3)-year renewal period, if
regular audit or non-audit services. based on assessment, the external auditors’
5. Pursuant to paragraph (5) of the report did not comply with BSP
MOA, SEC, BSP and IC shall mutually requirements.
recognize the accreditation granted by any
of them for external auditors and firms of E. QUALIFICATION REQUIREMENT
Group C or D companies under SEC, The following qualification requirements
Category B and C under BSP, and insurance are required to be met by the individual
brokers under IC. Once accredited/selected external auditor and the auditing firm at the
by any one (1) of them, the above-mentioned time of application and on continuing basis,
special requirements shall no longer be subject to BSP’s provisions on the delisting
prescribed by the other regulators. and suspension of accreditation:
For corporations which are required to 1. Individual external auditor
submit financial statements to different a. General requirements
regulators and are not covered by the mutual (1) The individual applicant must be
recognition policy of this MOA, the primarily accredited by the BOA. The
following guidance shall be observed: individual external auditor or partner
a. The external auditors of UBs which in-charge of the auditing firm must have at
are listed in the Exchange, should be least five (5) years of audit experience.
selected/accredited by both the BSP and (2) Auditor’s independence.
SEC, respectively; and In addition to the basic screening
b. For insurance companies and banks procedures of BOA on evaluating auditor’s
that are not listed in the Exchange, their independence, the following are required
external auditors must each be selected/ for BSP purposes to be submitted in the form
accredited by BSP or IC, respectively. For of notarized certification that:
purposes of submission to the SEC, the (a) No external auditor may be engaged
financial statements shall be at least audited by any of the covered institutions under Item
by an external auditor registered/accredited "B" hereof if he or any member of his
with BOA. immediate family had or has committed to
This mutual recognition policy shall acquire any direct or indirect financial
however be subject to the BSP restriction interest in the concerned covered institution,
that for banks and its subsidiary and affiliate or if his independence is considered
bank, QBs, trust entities, NSSLAs, their impaired under the circumstances specified
subsidiaries and affiliates engaged in allied in the Code of Professional Ethics for CPAs.
activities and other FIs which under special In case of a partnership, this limitation shall
laws are subject to BSP consolidated apply to the partners, associates and the
supervision, the individual and consolidated auditor-in-charge of the engagement and
financial statements thereof shall be audited members of their immediate family;
by only one (1) external auditor/auditing (b) The external auditor does not have/
firm. shall not have outstanding loans or any
6. The selection of external auditors credit accommodations or arranged for the
and/or auditing firm shall be valid for a extension of credit or to renew an extension
period of three (3) years. The SES shall make of credit (except credit card obligations
an annual assessment of the performance which are normally available to other credit
of external auditors and/or auditing firm and card holders and fully secured auto loans

APP. S-8
09.12.31
and housing loans which are not past due) a. The auditing firm must be primarily
with the covered institutions under Item "B" accredited by the BOA and the name of the
at the time of signing the engagement and firm’s applicant partner’s should appear in
during the engagement. In the case of the attachment to the certificate of
partnership, this prohibition shall apply to accreditation issued by BOA. Additional
the partners and the auditor-in-charge of the partners of the firm shall be furnished by
engagement; and BOA to the concerned regulatory agencies
(c) It shall be unlawful for an external (e.g. BSP, SEC and IC) as addendum to the
auditor to provide any audit service to a firm’s accreditation by BOA.
covered institution if the covered b. Applicant firms to act as the external
institution’s CEO, CFO, Chief Accounting auditor of entities under Category A in Item
Officer (CAO), or comptroller was "B" must have established adequate quality
previously employed by the external auditor assurance procedures, such consultation
and participated in any capacity in the audit policies and stringent quality control, to
of the covered institution during the one- ensure full compliance with the accounting
year preceding the date of the initiation of and regulatory requirements.
the audit; c. At the time of application, the
(3) Individual applications as external applicant firm must have at least one (1)
auditor of entities under Category A above signing practitioner or partner who is already
must have established adequate quality selected/accredited, or who is already
assurance procedures, such consultation qualified and is applying for selection by
policies and stringent quality control, to BSP.
ensure full compliance with the accounting d. A registered accounting/auditing
and regulatory requirements. firm may engage in any non-auditing
b. Specific requirements service for an audit client only if such
(1) At the time of application, service is approved in advance by the
regardless of the covered institution, the client’s audit committee. Exemptions from
external auditor shall have at least five (5) the prohibitions may be granted by the
years experience in external audits; Monetary Board on a case-by-case basis
(2) The audit experience above refers to the extent that such exemption is
to experience required as an associate, necessary or appropriate in the public
partner, lead partner, concurring partner or interest. Such exemptions are subject to
auditor-in-charge; and review by the BSP.
(3) At the time of application, the e. At the time of application, the
applicant must have the following track applicant firm must have the following
record: track record:
(a) For Category A, he/she must have (1) For Category A, the applicant firm
at least five (5) corporate clients with total must have had at least twenty (20)
assets of at least P50.0 million each. corporate clients with total assets of at least
(b) For Category B, he/she must have P50.0 million each;
had at least three (3) corporate clients with (2) For Category B, the applicant firm
total assets of at least P25.0 million each. must have had at least five (5) corporate
(c) For Category C, he/she must have clients with total assets of at least P20.0
had at least three (3) corporate clients with million each;
total assets of at least P5.0 million each; (3) For Category C, the applicant firm
2. Auditing firms must have had at least five (5) corporate

APP. S-8
09.12.31
clients with total assets of at least P5.0 management systems and corporate
million each. governance framework of the covered
entities.
F. APPLICATION FOR AND/OR e. Copy of the latest AFS of the
RENEWAL OF THE SELECTION OF applicant’s two (2) largest clients in terms
INDIVIDUAL EXTERNAL AUDITOR of total assets.
1. The initial application for BSP 2. Subject to BSP’s provision on early
selection shall be signed by the external deletion from the list of selected external
auditor and shall be submitted to the auditor, the selection may be renewed
appropriate department of the SES together within two (2) months before the expiration
with the following documents/information: of the three (3)-year effectivity of the
a. Copy of effective and valid BOA selection upon submission of the written
Certificate of Accreditation with the application for renewal to the appropriate
attached list of qualified partner/s of the firm; department of the SES together with the
b. A notarized undertaking of the following documents/information:
external auditor that he is in compliance (a) copy of updated BOA Certificate of
with the qualification requirements under Accreditation with the attached list of
Item "E" and that the external auditor shall qualified partner/s of the firm;
keep an audit or review working papers for (b) notarized certification of the external
at least seven (7) years in sufficient detail to auditor that he still possess all qualification
support the conclusion in the audit report required under Item "F.1.b" of this Appendix;
and making them available to the BSP’s (c) list of corporate clients audited
authorized representative/s when required during the three (3)-year period of being
to do so; selected as external auditor by BSP. Such
c. Copy of Audit Work Program which list shall likewise indicate the findings noted
shall include assessment of the audited by the BSP and other regulatory agencies
institution’s compliance with BSP rules and on said AFS including the action thereon
regulations, such as, but not limited to the by the external auditor; and
following: (d) written proof that the auditor has
(1) capital adequacy ratio, as currently attended or participated in trainings for at
prescribed by the BSP; least thirty (30) hours in addition to the
(2) AMLA framework; BOA’s prescribed training hours. Such
(3) risk management system, training shall be in subjects like international
particularly liquidity and market risks; and financial reporting standards, international
(4) loans and other risk assets review standards of auditing, corporate
and classification, as currently prescribed governance, taxation, code of ethics,
by the BSP rules and regulations. regulatory requirements of SEC, IC and BSP
d. If the applicant will have clients or other government agencies, and other
falling under Category A, copy of the Quality topics relevant to his practice, conducted
Assurance Manual which, aside from the by any professional organization or
basic elements as required under the BOA association duly recognized/accredited by
basic quality assurance policies and the BSP, SEC or by the BOA/PRC through a
procedures, specialized quality assurance CPE Council which they may set up.
procedures should be provided consisting The application for initial or renewal
of, among other, review asset quality, accreditation of an external auditor shall be
adequacy of risk-based capital, risk accomplished by a fee of P2,000.00.

APP. S-8
09.12.31
G. APPLICATION FOR AND/OR e. Copy of the latest AFS of the

RENEWAL OF THE SELECTION OF applicant’s two (2) largest clients in terms
AUDITING FIRMS of total assets; and
1. The initial application shall be f. Copy of firm’s AFS for the
signed by the managing partner of the immediately preceding two (2) years.
auditing firm and shall be submitted to 2. Subject to BSP’s provision on early
the appropriate department of the SES deletion from the list of selected auditing
together with the following documents/ firm, the selection may be renewed within
information: two (2) months before the expiration of the
a. copy of effective and valid BOA three (3)-year effectivity of the selection upon
Certificate of Accreditation with attachment submission of the written application for
listing the names of qualified partners; renewal to the appropriate department of the
b. notarized certification that the firm SES together with the following documents/
is in compliance with the general information:
qualification requirements under Item "E.2" a. a copy of updated BOA Certificate
and that the firm shall keep an audit or of Registration with the attached list of
review working papers for at least seven qualified partner/s of the firm;
(7) years insufficient detail to support the b. amendments on Quality Assurance
conclusions in the audit report and making Manual, inclusive of written explanation on
them available to the BSP’s authorized such revision, if any; and
representative/s when required to do so; c. notarized certification that the firm
c. copy of audit work program which is in compliance with the general
shall include assessment of the audited qualification requirements under Item
institution’s compliance with BSP rules and "G.1.b" hereof;
regulations, such as, but not limited to the The application for initial or renewal
following; accreditation of an auditing firm shall be
(1) capital adequacy ratio, as currently accompanied by a fee of P5,000.00.
prescribed by the BSP;
(2) AMLA framework; H. REPORTORIAL REQUIREMENTS
(3) risk management system, 1. To enable the BSP to take timely and
particularly liquidity and market risks; and appropriate remedial action, the external
(4) loans and other risk assets review auditor and/or auditing firm must report to
and classification, as currently prescribed the BSP within thirty (30) calendar days after
by the BSP rules and regulations. discovery, the following cases:
d. If the applicant firm will have a. Any material finding involving fraud
clients falling under Category A, copy or dishonesty (including cases that were
Quality Assurance Manual where, aside resolved during the period of audit);
from the basic elements as required under b. Any potential losses the aggregate of
the BOA basic quality assurance policies which amounts to at least one percent (1%)
and procedures, specialized quality of the capital;
assurance procedures should be provided c. Any finding to the effect that the
relative to, among others review asset consolidated assets of the company, on a
quality, adequacy of risk-based capital, risk going concern basis, are no longer
management systems and corporate adequate to cover the total claims of
governance framework of covered entities; creditors; and

APP. S-8
09.12.31
d. Material internal control accordance with generally accepted

weaknesses which may lead to financial auditing standards and identified non-audit
reporting problems. services.
2. The external auditor/auditing firm
shall report directly to the BSP within fifteen I. DELISTING AND SUSPENSION OF
(15) calendar days from the occurrence of SELECTED EXTERNAL AUDITOR/
the following: AUDITING FIRM
a. Termination or resignation as 1. An external auditor’s duly selected
external auditor and stating the reason pursuant to this regulation shall be
therefor; suspended or delisted, in a manner
b. Discovery of a material breach of provided under this regulation, under any
laws or BSP rules and regulations such as, of the following grounds:
but not limited to: a. Failure to submit the report under
(1) CAR; and Item "H" of this Appendix or the required
(2) Loans and other risk assets review reports under Subsec. X190.1;
and classification. b. Continuous conduct of audit despite
c. Findings on matters of corporate loss of independence as provided under
governance that may require urgent action Item "E.1" or contrary to the requirements
by the BSP. under the Code of Professional Ethics;
3. In case there are no matters to report c. Any willful misrepresentation in the
(e.g. fraud, dishonesty, breach of laws, etc.) following information/documents;
the external auditor/auditing firm shall (1) application and renewal for
submit directly to BSP within fifteen (15) accreditation;
calendar days after the closing of the audit (2) report required under Item "H"; and
engagement a notarized certification that (3) Notarized certification of the
there is none to report. external auditor and/or auditing firm.
The management of the covered d. The BOA found that, after due
institutions, including its subsidiaries and notice and hearing, the external auditor
affiliates, shall be informed of the adverse committed an act discreditable to the
findings and the report of the external profession as specified in the Code of
auditor/auditing firm to the BSP shall include Professional Ethics for CPAs. In this case,
pertinent explanation and/or corrective the BOA shall inform the BSP of the results
action. thereof;
The management of the covered e. Declaration of conviction by a
institutions, including its subsidiaries and competent court of a crime involving moral
affiliates, shall be given the opportunity to turpitude, fraud (as defined in the Revised
be present in the discussions between the Penal Code), or declaration of liability for
BSP and the external auditor/auditing firm violation of the banking laws, rules and
regarding the audit findings, except in regulation, the Corporation Code of the
circumstances where the external auditor Philippines, the Securities Regulation Code
believes that the entity’s management is (SRC); and the rules and regulations of
involved in fraudulent conduct. concerned regulatory authorities;
It is, however, understood that the f. Refusal for no valid reason, upon
accountability of an external auditor/ lawful order of the BSP, to submit the
auditing firm is based on matters within the requested documents in connection with an
normal coverage of an audit conducted in ongoing investigation. The external auditor

APP. S-8
09.12.31
should however been made aware of such partnership is dissolved. The accreditation
investigation; of such firm/partnership shall however be
g. Gross negligence in the conduct of reinstated by the BSP upon showing that the
audits which would result, among others, said dissolution was solely for the purpose
in non-compliance with generally accepted of admitting new partner/s have complied
auditing standards in the Philippines or with the requirements of this regulation and
issuance of an unqualified opinion which thereafter shall be reorganized and re-
is not supported with full compliance by registered;
the auditee with generally accepted e. There is a showing that the
accounting principles in the Philippines accreditation of the following number or
(GAAP). Such negligence shall be percentage of external auditors, whichever
determined by the BSP after proper is lesser, have been suspended or delisted
investigation during which the external for whatever reason, by the BSP:
auditor shall be given due notice and (1) at least ten (10) signing partners and
hearing; currently employed selected/accredited
h. Conduct of any of the non-audit external auditors, taken together; or
services enumerated under Item "E.1" for (2) such number of external auditors
his statutory audit clients, if he has not constituting fifty percent (50%) or more of
undertaken the safeguards to reduce the the total number of the firm’s signing partners
threat to his independence; and and currently selected/accredited auditors,
i. Failure to comply with the taken together.
Philippine Auditing Standards and f. The firm or any one (1) of its
Philippine Auditing Practice Statements. auditors has been involved in a major
2. An auditing firms; accreditation accounting/auditing scam or scandal. The
shall be suspended or delisted, after due suspension or delisting of the said firm
notice and hearing, for the following shall depend on the gravity of the offense
grounds: or the impact of said scam or scandal on
a. Failure to submit the report under the investing public or the securities
Item "H" or the required reports under Sec. market, as may be determined by the BSP;
X190.1. g. The firm has failed reasonably to
b. Continuous conduct of audit supervise an associated person and
despite loss of independence of the firm as employed auditor, relating to the
provided under this regulation and under following:
the Code of Professional Ethics; (1) auditing or quality control
c. Any willful misrepresentation in the standards, or otherwise, with a view to
following information/ documents; preventing violations of this regulations;
(1) Application and renewal for (2) provisions under SRC relating to
accreditation; preparation and issuance of audit reports
(2) Report required under Item "H"; and the obligations and liabilities of
and accountants with respect thereto;
(3) Notarized certification of the (3) the rules of the BSP under this
managing partner of the firm. Appendix; or
d. Dissolution of the auditing firm/ (4) professional standards.
partnership, as evidenced by an Affidavit h. Refusal for no valid reason, upon
of Dissolution submitted to the BOA, or order of the BSP, to submit requested
upon findings by the BSP that the firm/ documents in connection with an ongoing

APP. S-8
09.12.31
investigation. The firm should however be under this section shall be supported by a
made aware of such investigation. clear statement setting forth the following:
3. Pursuant to paragraph 8 of the (1) Each act or practice in which the
aforesaid MOA, the SEC, BSP and IC shall selected/accredited external auditor or
inform BOA of any violation by an auditing firm, or associated entry, if
accredited/selected external auditor which applicable, has engaged or omitted to
may affect his/her accreditation status as a engage, or that forms a basis for all or part
public practitioner. The imposition of of such suspension/delisting;
sanction by BOA on an erring practitioner (2) The specific provision/s of this
shall be without prejudice to the appropriate regulation, the related SEC rules or
penalty that the SEC, IC or BSP may assess professional standards which the Monetary
or impose on such external auditor pursuant Board determined as has been violated; and
to their respective rules and regulations. In (3) The imposed suspension or
case of revocation of accreditation of a delisting, including a justification for either
public practitioner by BOA, the sanction and the period and other
accreditation by SEC, BSP and IC shall requirements specially required within
likewise be automatically revoked/ which the delisted auditing firm or external
derecognized. auditor may apply for re-accreditation.
The SEC, BSP and IC shall inform each d. The suspension/delisting, including
other of any violation committed by an the sanctions/penalties provided in Sec.
external auditor who is accredited/selected X189 shall only apply to:
by any one (1) or all of them. Each agency (1) Intentional or knowing conduct,
shall undertake to respond on any referral including reckless conduct, that results in
or endorsement by another agency within violation or applicable statutory, regulatory
ten (10) working days from receipt thereof. or professional standards; or
4. Procedure and Effects of Delisting/ (2) Repeated instances of negligent
Suspension. conduct, each resulting in a violation of the
a. An external auditor/auditing firm applicable statutory, regulatory or
shall only be delisted upon prior notice professional standards.
to him/it and after giving him/it the e. No associate person or employed
opportunity to be heard and defend auditor of a selected/accredited auditing
himself/itself by presenting witnesses/ firm shall be deemed to have failed
evidence in his favor. Delisted external reasonably to supervise any other person
auditor and/or auditing firm may re-apply for purpose of Item "I.2.g" above, if:
for BSP selection after the period (1) There have been established in and
prescribed by the Monetary Board. for that firm procedures, and a system for
b. BSP shall keep a record of its applying such procedures, that comply with
proceeding/investigation. Said applicable rules of BSP and that would
proceedings/investigation shall not be reasonably be expected to prevent and
public, unless otherwise ordered by the detect any such violation by such associated
Monetary Board for good cause shown, person; and
with the consent of the parties to such (2) Such person or auditor has
proceedings. reasonably discharged the duties and
c. A determination of the Monetary obligations incumbent upon that person by
Board to impose a suspension or delisting reason of such procedures and system, and

APP. S-8
09.12.31
had no reasonable cause to believe that such K. AUDIT BY THE BOARD OF

procedures and system were not being DIRECTORS
complied with. Pursuant to Section 58 of RA. No. 8791,
f. The BSP shall discipline any otherwise known as “The General Banking
selected external auditor that is suspended Law of 2000” the Monetary Board may also
or delisted from being associated with any direct the board of directors of a covered
selected auditing firm, or for any selected institution or the individual members thereof,
auditing firm that knew, or in the exercise to conduct, either personally or by a
or reasonable care should have known, committee created by the board, an annual
of the suspension or delisting of any balance sheet audit of the covered
selected external auditor, to permit such institution to review the internal audit and
association, without the consent of the the internal control system of the
Monetary Board. concerned entity and to submit a report
g. The BSP shall discipline any of such audit to the Monetary Board
covered institution that knew or in the within thirty (30) calendar days after the
exercise of reasonable care should have conclusion thereof.
known, of the suspension or delisting of its
external auditor or auditing firm, without L. AUDIT ENGAGEMENT
the consent of the Monetary Board. Covered institutions shall submit the
h. The BSP shall establish for audit engagement contract between them,
appropriate cases an expedited procedure their subsidiaries and affiliates and the
for consideration and determination of the external auditor/auditing firm to the
question of the duration of stay of any appropriate department of the SES within
such disciplinary action pending review fifteen (15) calendar days from signing
of any disciplinary action of the BSP under thereof. Said contract shall include the
this Section. following provisions:
1. That the covered institution shall be
J. SPECIFIC REVIEW responsible for keeping the auditor fully
When warranted by supervisory informed of existing and subsequent changes
concern, the Monetary Board may, at the to prudential regulatory and statutory
expense of the covered institution require requirements of the BSP and that both
the external auditor and/or auditing firm parties shall comply with said requirements;
to undertake a specific review of a 2. That disclosure of information by the
particular aspect of the operations of these external auditor/auditing firm to the BSP as
institutions. The report shall be submitted required under Items “H” and “J” hereof, shall
to the BSP and the audited institution be allowed; and
simultaneously, within thirty (30) 3. That both parties shall comply with
calendar days after the conclusion of said all the requirements under this Appendix.
review. (As amended by Circular No. 660 dated 25 August 2009)

APP. S-9
13.12.31
GUIDELINES IN CLASSIFYING LOANS AND OTHER RISK ASSETS AND

SETTING UP OF ALLOWANCE FOR PROBABLE LOSSES
(Appendix to Sections 4308S and 4392S)
NSSLAs are responsible for the regular 1. Loans especially mentioned. These
review and assessment of the quality of their loans have potential weaknesses which, if
loan portfolio and other risk assets. It is the left uncorrected, may affect the repayment
duty of the board and senior management of the loan. Their characteristics include:
of NSSLAs to ensure that the good quality a. Loans extended to member-
of these assets is maintained, and that borrowers whose paying capacity was not
adequate loss reserves are set-up at all times. appropriately determined;
To achieve these objectives, NSSLAs shall b. Accounts with defects and
adopt and fully document policies and deficiencies in documentation which may
procedures for an effective internal asset render the collection of the loan difficult, e.g.,
review system and monitoring processes loans with unsigned promissory notes; and
which should, at a minimum, comply with c. Accounts which are 1-10 days past
the standards prescribed herein. These due based on the established and approved
policies and procedures should be clearly collection cycle indicated in the product
communicated to all relevant parties in the manual of an NSSLA.
organization to ensure implementation 2. Substandard. These loans have well-
thereof. Adequate measures should be defined weakness or weaknesses that
adopted to see to it that asset review policies jeopardize their repayment/liquidation,
and procedures remain relevant and including adverse trends or developments
appropriate with due consideration of the that affect willingness or capacity to pay.
design and characteristics of their portfolio, Basic characteristics include the following:
and that enough safeguards to ensure that a. For secured loans:
changes where appropriate are adopted. (1) There is an imminent possibility of
Failure to conduct this regular assessment foreclosure or acquisition of the collateral
and set-up adequate loss reserves shall be because failure of all collection efforts.
considered unsafe and unsound practice. b. For unsecured loans:
(1) Loans under litigation; and
I. Classification of loans. Loans shall be (2) Loans classified as “Loans Especially
qualitatively assessed and grouped as Mentioned” in the last examination the
unclassified or classified. weaknesses of which remained uncorrected
A. Unclassified loans. These are loans in the current examination.
that do not have a greater-than-normal credit In addition, loans which are 11-30 days
risk and do not possess the characteristics past due based on the established and
of classified loans as defined. The borrower approved collection cycle indicated in the
has the apparent ability to satisfy his product manual of an NSSLA.
obligations in full and therefore no loss in 3. Doubtful. These are loans whose
ultimate collection is anticipated. characteristics make collection or
B. Classified loans. Their classification liquidation highly improbable and from
and characteristics are detailed as follows: which substantial loss is probable, such as:

APP. S-9
13.12.31
a. Past due loans secured by real estate amortization of principal and/or interest has
mortgage, the title to which is subject to been established and if such loan meets the
adverse claim or with defect in ownership criteria of the lower loan classification.
rendering settlement of the loan through
foreclosure doubtful; II. Classification of Other Risk Assets
b. Past due loans secured by collaterals A. Real and Other Properties Acquired
which have declined in value materially (ROPA), Sales Contract Receivable (SCR)
without the borrower offering additional and Investments shall be subject to
collateral for the loans; and impairment provisions under the Philippine
c. Loans which are 31-90 days past due Accounting Standards (PAS) which were
based on the established and approved adopted by the Bangko Sentral. ROPA
collection cycle indicated in the product exceeding P5.0 million book value shall be
manual of an NSSLA. appraised by external appraisers acceptable
4. Loss. These are loans considered to the Bangko Sentral. An in-house appraisal
uncollectible. Their basic characteristics of all ROPAs shall be made every other year:
include the following: Provided, That immediate re-appraisal shall
a. The member-borrower’s be conducted on ROPAs which materially
whereabouts is unknown, or he has decline in value.
absconded, is dead or his earning power is
While ROPA and SCR are subject to
permanently impaired and his co-makers or
impairment provisions, their classifications
guarantors are insolvent or that their
status shall be “Substandard”. ROPAs are
guaranty is not financially supported:
not sound assets because their nature as
Provided, That the NSSLA may take into
non-liquid and non-productive. As such their
account the outstanding balance of deposits
immediate disposal is highly recommended.
and/or capital contributions of the member-
On the other hand, SCRs come from
borrower and/or the present realizable value
conversion of ROPA, hence, they shall
of security offered;
b. Where the collaterals securing the initially carry the classification of their
loans are without recoverable values and predecessor. SCRs which meet all the
the member-borrower and his co-makers are requirements/conditions enumerated below
insolvent; and are considered performing assets and not
c. Loans which are past due for ninety- subject to classification:
one (91) days and beyond based on the 1. That there has been a down
established and approved collection cycle payment or installment payments on the
indicated in the product manual of an principal of at least twenty percent (20%)
NSSLA. of the agreed selling price.
C. Restructured loans. Upon execution 2. That payment of the principal must
of the restructuring agreement, the be in equal installments or in diminishing
classification of a loan prior to restructuring, amounts and with maximum intervals of
either “loans especially mentioned”, or one (1) year.
“substandard” or “doubtful” shall be 3. That any grace period in the
retained. The upgrading of the loan’s payment of principal shall not be more than
classification shall only be effective after a one (1) year; and
satisfactory track record of three (3) 4. That there is no installment payment
consecutive payments of the required in arrear either on principal or interest:

APP. S-9
13.12.31
Provided, That an SCR account shall be Classification Minimum Specific

automatically classified “substandard” and Allowance (Percent)
Loans Accounts
considered non-performing in case of Clean Fully Receivables
non-payment of any amortization due: Secured
Provided further, That an SCR which has Unclassified 0 0 0
been classified “substandard” may only be Loans Especially
Mentioned (LEM) 10 5 N/A
upgraded to unclassified/performing status
Substandard 25 12.5 25
after a satisfactory track record of at least Doubtful 50 25 50
three (3) consecutive payments of the Loss 100 50 100
required amortization of principal and/or
interest has been established. Provided, That prudent level of
The Bangko Sentral however, reserves provisioning should be increased beyond
the right to require that specific provisions the minimum prescribed depending on the
on ROPA and SCR be made, if based on its estimated realizable net present value of the
assessment, the NSSLA is unable to make collateral less transaction costs of realizing
necessary impairment provisioning. its value: Provided further, That for purposes
B. Accounts receivables shall be of comprehensive estimating the minimum
classified in accordance with age as follows, required level of provisioning for the loan
unless there is good reason for non- portfolio, the Bangko Sentral reserves the
classification: right to rely on valid sampling techniques
and to group loans with similar
No. of Days Outstanding Classification characteristics.
61-180 Substandard B. General allowance. In addition to the
181-360 Doubtful
Beyond 361 Loss specific allowance for probable losses under
Item “1”, a general provision for loan losses
The classification according to age of shall also be set-up as follows:
accounts receivable shall be used in (a) Two percent (2%) of the outstanding
classifying other risk assets not covered balance of unclassified restructured loans;
above. However, their classification should and
be tempered by favorable information (b) One percent (1%) of the outstanding
gathered in the review. balance of unclassified loans.
3. In addition to the foregoing minimum
III. Allowance for Probable Losses. The prudential requirements, NSSLAs are also
allowance for losses for classified loans and required to comply with the provisions of
other risk assets shall be set up immediately the Philippine Accounting Standards (PAS)
in accordance with the following on the recognition of impairment losses on
guidelines: its financial assets: Provided, That NSSLAs
A. Specific allowance. Specific are required to meet the Bangko Sentral
minimum allowance shall be immediately minimum allowance for losses or the
set-up based on the qualitative review of required provisioning under the PAS,
loans and accounts receivable, as follows: whichever is higher.

APP. S-10
14.12.31
GUIDELINES AND PROCEDURES GOVERNING THE

CONSUMER ASSISTANCE MANAGEMENT SYSTEM (CAMS)
OF BSP-SUPERVISED FINANCIAL INSTITUTIONS
[Appendix to Subsec. 4402S.4]
I. Statement of Policy be resolved without the need of third-party

The Bangko Sentral acknowledges the intervention, such as outsource service
indispensable role of financial consumers providers, external auditors, or other banks.
in bringing about a strong and stable Resolution thereof must be achieved within
financial system, their right to be protected a 7-day period.
in all stages of their transactions with c. Complex complaint/request-
Bangko Sentral- Supervised Financial complaint/request which needs assessment,
Institutions (BSFIs), and be given an avenue verification, or investigation with third-party
to air out their grievances in the products intervention. Resolution thereof may ideally
and services of BSFIs. Consumer protection be achieved within a 45-day period.
is regarded as a core function d. BSFIs- include banks, quasi-banks,
complementary to Bangko Sentral's pawnshops, foreign exchange dealers,
prudential regulation and supervision, money changers, remittance agents,
financial stability, financial inclusion, and electronic money issuers, non-stock savings
financial education agenda. Towards this and loan associations and other Bangko
end, the Bangko Sentral hereby issues the Sentral-Supervised Financial Institutions.
following minimum guidelines e. Consumer- refers to a natural or
institutionalizing consumer assistance juridical person who has a complaint,
mechanism of BSFIs. inquiry or request relative to the BSFI's
products and services.
II. Applicability and Scope
The CAMS requirements and minimum IV. Role of the Board and Senior
guidelines on receiving, recording, Management
evaluating, resolving, monitoring, reporting, The board of BSFIs shall be responsible
and giving feedback to consumers shall for the delivery of effective recourse to its
apply to a BSFI and its branches/other offices. consumers. Pursuant thereto, the board shall:
The provisions of these guidelines shall, as a. Approve the consumer assistance
far as practicable, also apply to inquiries and policies and procedures;
requests received from clients and potential b. Approve risk assessment strategies
clients. relating to effective recourse by the consumer;
c. Ensure compliance with consumer
III. Definition of Terms assistance policies and procedures;
a. Complaint- is an expression of d. Provide adequate resources devoted
dissatisfaction relative to a financial product to consumer assistance; and
or service in which a response or resolution e. Review the consumer assistance
is expected. policies at least annually.
b. Simple complaint/request- complaint/ The BSFI's senior management shall be
request where frontline staff solution or responsible for the implementation of the
immediate explanation or action can be consumer assistance policies and
rendered. A resolution is immediate if it can procedures.
Manual of Regulations for Non-Bank Financial Institutions Appendix S-10 - Page 1

APP. S-10
14.12.31
V. Minimum Requirements (1) Consumer assistance officer. The

A. Manual of Consumer Assistance Policies consumer assistance officer shall have the
and Procedures following responsibilities:
A BSFI must have a manual of policies and (a) Receive and acknowledge consumer
procedures (Manual) in handling consumer concerns;
complaints, inquiries, and requests from (b) Record concerns in a Register/
financial consumers. The Manual, as a Database;
minimum, provide for the following: (c) Make an initial review and
(1) Corporate structure of the group on investigation of concerns;
consumer assistance with specified roles and (d) Process concerns;
responsibilities/tasks; (e) Provide official reply to consumer;
(2) Capability building for customer (f) Request client feedback; and
assistance team; (g) Prepare and submit report to the
(3) Consumer assistance process and head consumer assistance officer or
timeline; consumer assistance group.
(4) Complaint recording/data management (2) Consumer assistance group/head
system; consumer assistance officer. The consumer
(5) Risk assessment strategies; assistance group/head consumer assistance
(6) Reporting of complaints data to BSFI's officer shall, as a minimum, perform the
board and senior management and Bangko following:
Sentral; (a) Monitor consumer assistance process;
(7) System for evaluating effectiveness of (b) Keep track, identify, and analyze the
the CAMS; and nature of complaints and recommend
(8) Glossary of technical components in solutions to avoid recurrence;
the Manual. (c) Report to senior management the
complaints received on a monthly basis
B. Corporate Structure including reasons for such complaints, the
A BSFI shall have a consumer assistance recommended solutions to avoid
officer/independent business unit or group recurrence, and the suggestions for process
with defined roles and responsibilities in or personnel competency needing
handling consumer concerns. The corporate improvement; and
structure shall depend on the BSFI's asset size, (d) Ensure immediate escalation of any
as follows: significant complaint to concerned unit of
Consumer Assistance BSFIs with total assets the BSFI.
Group of at least P1.0 billion
Dedicated Head BSFIs with total assets of
Consumer less than P1.0 billion but C. Capacity building
Assisstance more than 100 million All consumer assistance personnel must
Officer be equipped with knowledge on the
Head Consumer BSFIs with total assets of structure and implementation of the BSFI's
Assistance Officer less than 100 million consumer assistance mechanism. As a
minimum, they shall be provided with
At least one (1) consumer assistance officer periodic trainings on the following:
per branch, extension office or banking office (1) Solid interpersonal skills/customer
must be designated to handle consumer service;
concerns. (2) Basic and advanced listening skills;
Appendix S-10 - Page 2 Manual of Regulations for Non-Bank Financial Institutions

APP. S-10
14.12.31
(3) Written and verbal communication F. Consumer Assistance Process and

skills; Timelines
(4) Handling financial consumer (1) Complaint/Request
feedback; SIMPLE1 COMPLEX1
(5) Dealing with difficult people; Acknowledgment Within 2 days Within 2 days
(6) Problem solving and conflict Processing and Within 7 days Within 45 days
resolution; and resolution
(7) BSFI's corporate structure and (assess,
investigate,
products and services.
and resolve)
Communication Within 9 days Within 47 days
D. Publication of Consumer Assistance of Resolution
Management System
(1) BSFI's shall publish details of their (a) Receiving and acknowledging
CAMS in a clear and plain language. complaints/requests
(2) Publication shall be made through (i) A BSFI shall obtain and record the
any two of the following means: following data from the consumer: (1) full
(a) Posting of summary details of the name and contact details, (2) nature of
CAMS in conspicuous places within the complaint or request and its details; (3)
premises of BSFIs and their branches/other resolution requested; (4) signature of the
offices; complainant/requester; and (5) name of BSFI
(b) A leaflet or primer given to all personnel directly handling/in-charge of the
consumers who sign up for new banking complaint.
service. (ii) The consumer assistance officer must
(c) Terms and Conditions of a BSFI's be able to explain the consumer assistance
product or service; process and timelines.
(d) Posting in the BSFI's website; and (iii) The acknowledgment shall provide
(e) Any analogous manner. an assurance that the BSFI is dealing with
the complaint, request additional
E. Consumer Assistance Channels documents, if necessary, and that the
(1) Consumers may lodge their concerns complainant shall be kept informed of the
through any reasonable means, such as, a progress of the measures being taken for the
centralized web-portal, walk-in or personal complaint’s resolution
visit, letter, e-mail, telephone, and facsimile. (b) Investigating and resolving
(2) A BSFI must maintain a consumer
complaints
assistance helpdesk or hotline dedicated for
(i) A BSFI must establish an institutional
customer concerns and service and manned
approach in assessing and investigating
by a consumer assistance group.
complaints/requests and options in resolving
(3) A BSFI shall ensure that consumers
them, considering the peculiarities of the
know how and where to lodge their
concerns. complaints/requests and the desired
(4) A BSFI is encouraged to provide remedies of the party.
alternative modes of resolution, such as (ii) If assessment and investigation on
conciliation, mediation and arbitration, in complex complaints/requests cannot be
order to achieve settlement of the issues at completed within the timeframe stated
the BSFI level. above, complainants shall be informed of
1
all periods are reckoned from receipt of complaint.

APP. S-10
14.12.31
the: (aa) reason thereof; (bb) need for (2) Consumer feedback may be
extended timeframe; and (cc) date on which obtained through a feedback form/
the complainant may expect the outcome customer satisfaction survey available for
of the BSFI assessment and/or investigation; walk-in complainants, in the website, or
Provided, however, that the additional through a voice logger system.
period shall not exceed forty-five (45) days. (3) Customer feedbacks shall be
This will afford the complainants recorded and analyzed to improve the
opportunity to seek other means to resolve system and to enhance personnel
their complaints. capabilities in handling complaints.
(iii) Result of assessment, investigation,
and BSFI’s final response shall be J. Complaints Recording/Data Management
communicated to the complainant in (1) A BSFI and its branches/other
writing in simple and clear language. The offices shall maintain copies of the
BSFI shall likewise inform the complainant of complaints/requests received, including
the possible remedies available to the party, supporting and other relevant documents
including resort to Bangko Sentral consumer thereto, within a period of two (2) years
assistance mechanism and the courts. from date of resolution.
(2) Inquiries Microfilms/digital copies of original
A BFSI must respond to inquiries received, documents may be maintained by a BSFI
at the latest, by the next business day. in accordance with its management
information systems for record keeping.
G. Confidentiality (2) A BSFI and its branches/other
A BSFI shall not disclose to a third party offices shall maintain complaints/requests
information acquired from the consumer in register which contains the following
all stages of the complaint, except as may information:
be required by the conduct of the BSFI’s (a) Name of the complainant;
investigation. (b) Subject/nature of the complaint;
The subject/nature of complain may
H. Conflict of interest be indicated by classification, such as
A BSFI shall ensure that complaints are those related to credit cards, deposits,
investigated by a consumer assistance administrative, foreign exchange,
officer who is neither directly nor indirectly remittances, investments, others;
involved in the matter which is the subject (c) Name of the personnel directly
of the complaint. handling/in-charge of the complaint and
officer supervising the resolution of the
I. Consumer Feedback complaint;
(1) Subject to the willingness of the (d) Date of receipt of complaint by the
consumer, BSFIs shall ask for feedback BSFI;
on the following matters: (e) Actions taken on the complaint or
(a) Overall satisfaction (whether request;
satisfied, somewhat satisfied, or (f) Resolution provided;
dissatisfied); (g) Date of resolution 1; and
(b) Processes needing improvement; (h) Other information such as, log and
(c) Personnel needing improvement; details of phone calls made or received.
and (3) The Consumer assistance group/head
(d) Any suggestions for improvement. consumer assistance officer shall maintain:
1
The complaint register must reveal the reason in case the date of resolution falls outside the regulatory
deadline.

APP. S-10
14.12.31
(a) A master register of all complaints (iii) Aging of complaints or requests;

received by the BSFIs and its branches/ (iv) Explanations on deviations, if any,
other offices; and from required resolution period; and
(b) A complaint database to identify (v) General description of resolutions
the trend of complaints received, potential and actions taken to resolve complaints/
problems, and risks. requests;
(d) The report shall include
K. Risk Assessment Strategies recommendation on how to avoid recurring
Pursuant to the BSFI’s consumer protection complaints and suggestions for process/
risk management system, the BSFI shall put personnel competency improvement, as
in place appropriate management controls needed.
and take reasonable steps to ensure that in (e) The report of the BSFI’s compliance
handling complaints/requests, it: (1) identifies and internal audit departments concerning
and remedies any recurring or systemic the independent review conducted on the
problems; and (2) identifies weaknesses in complaints report, policy recommendations,
the BSFI’s internal control procedure or and consumer protection compliance, shall
process. This may be done by: be elevated to Board every quarter.
(a) Analyzing complaints/requests data; (f) The BSFI shall include complaints/
(b) Analyzing causes for complaints/ requests statistics in its Annual Report.
requests; (2) Reporting to the Bangko Sentral
(c) Considering whether such identified A BSFI shall submit a consolidated
weaknesses may also affect other processes Complaints Report to the Supervisory Data
or products, including those not directly Center (SDC) of the Supervision and
complained of/requested; and Examination Sector on a quarterly basis.
(d) Correcting, whether reasonable to Such report shall be submitted in the format
do so, such causes taking into consideration required by Bangko Sentral. Submission of
the concomitant costs and other resources. the report to the SDC shall not be later than
one (1) month after the end of every quarter.
L. Complaint Reporting A Complaints Report is a Category B Report
(1) Internal Reporting for purposes of applying the appropriate
(a) The consumer assistance officers in monetary penalty.
the branches, extensions office and other
offices of the BSFI shall submit a complaints M. Interface with Bangko Sentral
report to the consumer assistance group / (1) Pursuant to Bangko Sentral’s
head consumer assistance officer on a Consumer Protection Framework, a BSFI
monthly basis. shall exhaust all internal remedies
(b) Complaints report shall be submitted available to address the issues raised by the
on a monthly basis by the consumer consumers in their complaints/requests.
assistance group/head consumer (2) Consumers dissatisfied with BSFI’s
assistance officer to the board and senior response or action may seek assistance with
management. BSP-FCPD (previously FCAG) in accordance
(c) The report shall include, as a with Bangko Sentral Consumer Assistance
minimum: Mechanism.
(i) General category of complaints (3) Allegations of consumers that the
received; BSFI has not properly and efficiently
(ii) Statistics/frequency of said handled, processed, and responded to their
complaints; concerns shall be validated, and where

APP. S-10
14.12.31
appropriate, considered in FCPD’s outsource entity/person of the outsourced

(previously FCAG) assessment of the BSFI’s consumer assistance activities/services.
compliance with Bangko Sentral Consumer
Protection regulations. This is without O. Accountability and Rewards
prejudice to the imposition of appropriate In order to ensure fair treatment and
enforcement actions. It is presumed that the responsible business conduct of personnel
higher number of complaints received by engaged in consumer relations, a
the Bangko Sentral reflects the non- performance appraisal system which
effectiveness of the BSFI’s CAMS. considers the performance of the personnel
assigned to manage/handle complaints shall
N. Outsourcing of Handling Consumer be put in place. The performance appraisal
of the personnel shall be linked to their
Concerns
efficiency in handling consumer complaints.
In outsourcing handling of consumer
This could be done through rewards/
concerns, a BSFI shall:
remuneration for excellent behavior.
(1) Conduct due diligence in the
selection of the outsourced entity/person; P. Consumer Assistance to Persons with
(2) Be responsible for the performance Disabilities (PWDs) and non-English
thereof in the same manner and to the same Speakers
extent as if performed by itself; As far as practicable, a BSFI shall take
(3) Comply with all laws and into account the needs of PWDs, such as,
regulations governing the consumer but not limited to those with learning
assistance activities/services performed by difficulties, people who are deaf or hard of
the outsource entity/person in its behalf; hearing, the visually impaired, and the non-
and English speakers, in ensuring that they
(4) Manage, monitor, and review on an understand the CAMS.
ongoing basis the performance by the (Circular No. 857 dated 21 November 2014)

Regulations Governing Non Stock Savings and Loan Associaitons

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Regulations Governing Non Stock Savings and Loan Associaitons

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MANUAL OF REGULATIONS FOR NON-BANK FINANCIAL INSTITUTIONS

PART ONE - ORGANIZATION, MANAGEMENT AND ADMINISTRATION

SECTION 4101S Scope of Authority of Non-Stock Savings and Loan Associations

SECTIONS 4102S - 4105S (Reserved)

SECTION 4106S Capital of NSSLAs

4106S.2 - 4106S.6 (Reserved)

4106S.7 Revaluation surplus

SECTIONS 4107S - 4110S (Reserved)

SECTIONS 4111S - 4115S (Reserved)

D. CAPITAL-TO-RISK ASSETS RATIO

SECTION 4116S Capital-to-Risk Assets Ratio

SECTION 4117S Withdrawable Share Reserve

SECTION 4118S Surplus Reserve for Ledger Discrepancies

SECTION 4120S (Reserved)

SECTIONS 4121S - 4125S (Reserved)

F. NET INCOME DISTRIBUTION

SECTION 4126S Limitations on Distribution of Net Income

SECTIONS 4127S - 4140S (Reserved)

G. TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS

SECTION 4141S Definition; Qualifications; Responsibilities and Duties of

SECTION 4142S Definition and Qualifications of Officers

SECTION 4143S Disqualification of Trustees and Officers

SECTION 4144S Compensation of Trustees, Officers and Employees

SECTION 4146S Agents and Representatives

SECTION 4147S Bio-data of Trustees and Officers

SECTION 4148S Full-Time Manager for NSSLAs

SECTIONS 4149S - 4150S (Reserved)

H. BRANCHES AND OTHER OFFICES

SECTION 4151S Establishment of Branches/Extension Offices

SECTIONS 4152S - 4155S (Reserved)

I. BUSINESS DAYS AND HOURS

SECTION 4156S Business Days and Hours

SECTIONS 4157S - 4160S (Reserved)

SECTION 4161S Records

SECTION 4162S Reports

SECTION 4163S (Reserved)

SECTIONS 4165S - 4170S (Reserved)

SECTION 4171S External Auditor

SECTION 4172S Financial Audit

SECTION 4173S (Reserved)

SECTION 4174S Risk Management Function

SECTIONS 4175S - 4179S (Reserved)

SECTION 4180S Selection, Appointment, Reporting Requirements and Delisting

SECTION 4181S Publication Requirements

SECTION 4182S Business Name

SECTION 4183S Prohibitions

SECTIONS 4184S - 4189S (Reserved)

SECTION 4190S Guidelines on Outsourcing

SECTIONS 4191S (Reserved)

SECTION 4192S Prompt Corrective Action Framework

SECTION 4194S Market Risk Management

SECTION 4195S Liquidity Risk Management

SECTION 4196S Information Technology Risk Management (ITRM)

SECTIONS 4197S - 4198S (Reserved)

SECTION 4199S General Provision on Sanctions

PART TWO - DEPOSIT AND BORROWING OPERATIONS

SECTION 4201S Checking Accounts

SECTIONS 4202S - 4205S (Reserved)

SECTION 4206S Definition

SECTION 4207S Minimum Deposit

SECTION 4208S Withdrawals

SECTION 4209S Dormant Savings Deposits

SECTIONS 4210S - 4215S (Reserved)

SECTIONS 4216S - 4220S (Reserved)